Elizabeth Warren, Chair of the Congressional Oversight Panel, shares a very important message concerning the toxic assets that are still on the U.S. bank’s balance sheets. I strongly encourage you to watch this short video and consider how this problem is going to be resolved. Watch here!

Peter Schiff shares some great insights into our current financial crisis: “The nationwide revelry surrounding our apparent economic recovery was disrupted this week by the release of lower-than-expected retail sales data. However, rather than sending a chill up the spines of those hoping for a quick end to the downturn, the numbers should be welcomed. Though this may come as a surprise to most observers, lower retail sales are precisely what our economy needs.”

He continues, “America’s economic vitality will never be restored until we rebuild our savings and pay down our debts. To build back up, we must change the pattern of capital flows from the phony economy. It is a painful process, but one that will leave our economy on a stronger foundation. Unfortunately, Americans cannot accomplish these goals unless they stop shopping, live within their means, and replenish their savings. Though this may be problematic for retailers, it is beneficial to the overall economy.”¹

Stocks consolidated this week even as most economic numbers were depressing. The market right now in the dog days of summer are suffering from a lack of volume and this, in my opinion, explains how the markets can trudge ahead while the economy sputters and falters.

I believe the day of reckoning is fast approaching for all world markets. Consider the fact that we have thrown trillions of dollars at the big banks and yet they still have the toxic paper on their books! Because of an accounting rule change, they don't have to recognize the loss of value (if there is any).

I have never been more bearish than I am at this time. My technical indicators are all pointing down and the fundamentals are downright awful. I believe we will see new lows whether it is this fall or sometime in 2010.

We have more bad loans via commercial real estate to hit. Consider the fact that the U.S. consumer is 70% of the economy. The consumer is cutting back on consumption. He/she can no longer tap into a home equity loan to buy "stuff". That piggy bank is closed. Two years into the recession and we are still losing jobs. How many workers who are qualified are going to rush out and buy for the sheer pleasure of it?

Looking specifically at the Shanghai market, it is also giving danger signals. We have had some big sell offs over the past couple of weeks that could be a prelude to another Autumn swoon. Remember, China is being touted as the engine of growth for the world. Lights on the dashboard indicate that the engine may be sputtering…

Insider selling has been brisk and this past week it kicked into a new gear. The ratio of insider sellers to buyers reached "the second-highest extreme of the past six years,” Jason Goepfert reported yesterday on his website www.sentimentrader.com.

To conclude, I would be getting out of stocks and sitting out of the market until the long overdue correction occurs. Risk takers may consider shorting the markets through various ETF's.

Treasuries put in a big advance this week as asset allocation is favoring government treasuries as a safer alternative to stocks at this point. Treasuries could see additional gains as stocks falter, but I would avoid long-term treasuries. With the U.S. debt load at unsustainable levels, long-term treasuries are simply not a wise investment.

The dollar retreated from last week’s run on low volume. There isn't much to add to my comments of the past few months. Longer term, the dollar is in trouble. Short term, when stocks drop, it could be a support to the dollar.

Gold and silver were little changed for the week. Silver did stab above $15/ounce which is the highest trade since May when we had gone over $16. Metals will take their next trading direction from the dollar in an inverse manner. We patiently wait.

As we consider the condition of our country, the financial challenges that lie ahead, and the potential for terrorism and war, we must balance the facts with faith in God. He has given His followers promises that we can cling to:

¹⁹And my God will meet all your needs according to his glorious riches in Christ Jesus. Phil. 4:19

⁵Keep your lives free from the love of money and be content with what you have, because God has said, "Never will I leave you; never will I forsake you." Hebrews 13:5

¹⁰Since you have kept my command to endure patiently, I will also keep you from the hour of trial that is going to come upon the whole world to test those who live on the earth. Rev. 3:10

As you evaluate and consider the times in which we live, remember the promises of God and put your faith and dependence on Him not in your own wisdom and ingenuity. We need to face the realities of the day but we must also remember the faithfulness of God.

Editor’s note: Check out the Global Perspectives web site and see the new features, polls, news links, and past issues of the GPUpdate. (www.globalperspectives.info)

¹http://www.europac.net/externalframeset.asp?from=home&id=17007&type=schiff

²Market commentary is provided by Mr. Steve Meyers of Grainbelt Commodities, Marco Island, FL