Why the dollar surge won’t last – posted by Prier DuPlessis – Paul Kedrosky, guest contributor, argues in a thoughtful manner that the US dollar’s surge won’t last. “Down is up, and up is down? How is it that a growing US economy was bad for the US dollar, but a potentially calamitous collapse in the same US economy has the US dollar up double-digit percentages?,” asks Kedrosky. – Investment Postcards From Capetown

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Bank Bailouts Justified to Minimize Economic Costs -  The recent banking bailouts get some academic underpinning in a new working paper from the International Monetary Fund.  “Banking bailouts in periods of significant financial distress may be justified to avoid an economically costly and persistent credit crunch,” the paper finds. … – Research Recap

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Lending grows – first time since Lehman collapse -  David Goldman – For the first time in 7 weeks, a critical source of short-term funding for businesses and banks grows, as Fed buys up $143.9 billion in corporate debt. -   CNNMoney.com  

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Credit Crisis Expert Says Proposed Plan to Bail Out Delinquent Homeowners May Face Too Many Problems to Succeed -   By William Patalon III – A tentative Bush Administration plan aimed at keeping as many as three million homeowners who are behind on their mortgages from losing their houses will be difficult to administer, and could end up costing the country hundreds of billions of dollars more than the plan’s architects expect, a Money Morning contributing editor and credit-crunch expert said yesterday.  … Even so, he said that “any bailout plan that directly addresses foreclosures is political posturing that will ultimately be overwhelmed by inevitable economic realities.” -   Money Morning/The Money Map Report

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TV quickly spreads financial crisis -  Andrew Leckey – Chicago Tribune

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Ross Perot has a good chart presentation of financial challenges ahead that must be solved. 

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Spreading the risk has spread the losses – THERE is such a thing as a free lunch. That, at least, is what pension funds have been told in recent years. Diversify into new asset classes and your portfolio can improve the trade-off between risk and return because you will be making uncorrelated bets.... – The Economist 

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Massive Effort to Save Mortgages  – ROBIN SIDEL - J.P. Morgan Chase & Co. launched an ambitious plan Friday to modify the terms of $70 billion in mortgages for borrowers who are behind on their payments or soon could be.  The move by the New York bank will cover as many as 400,000 borrowers. They’ll be moved into loans carrying lower interest rates, smaller principal amounts or other more-affordable terms.
- Wall Street Journal
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Crunch time at CME – Ann Saphir -  The financial crisis that has blunted growth in CME Group Inc.’s futures business also presents CEO Craig Donohue with the opportunity to seize a market worth up to $400 million a year in new revenue — but he’ll have to outfox a powerful rival, overcome Wall Street distrust of Chicago exchanges and perform a nifty dance step with resurgent regulators. – Crain’s Chicago Business

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Wachovia had sought FDIC help, was told no -  Rick Rothacker – Agency determined Citigroup should buy ailing bank, securities filing shows. – CharlotteObserver.com

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How the economy stole the election – Two years ago it seemed that the election would hinge on Iraq, now it’s the economy that’s on voter’s minds. Here’s how that happened. – CNN Money 

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This old house policy - Our government’s approach to housing has grown nonsensical: encourage borrowing to keep homes expensive. It’s time to rebuild. - Edward Glaeser -  Boston Globe 

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on lines of credit and CDS – Central Banks Are Destroying Traditional Risk Spread Methodologies – Rakesh Saxena -   seeking alpha

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Washington Mutual:  Was There a Loan It Didn’t Like? – GRETCHEN MORGENSON – … Ms. Cooper is one of 89 employees whose stories fill a voluminous complaint filed against officers of the company by the Ontario Teachers’ Pension Plan board, a big shareholder. … – New York Times 

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Charts of top 10 states with most and least underwater loans – Tim Iacono – themessthatgreenspanmade 

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Fed Chair Urges Overhaul of Freddie Mac, Fannie Mae – Neil Irwin – The government may need to back home mortgages indefinitely to keep the broader housing market from going into a tailspin every time there is a financial crisis, Federal Reserve Chairman Ben S. Bernanke said ... – Washington Post

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Fed Makes Breathtaking Changes, Cuts Rates Too – John Berry – Bloomberg