Conservative social and political groups are vowing to fight the recent California ruling in which a republican-dominated court declared that sexual preference should not bar couples from legal marriage. In an Associated Press article, the court opinion is quoted as stating that "domestic partnerships that provide many of the rights and benefits of matrimony are not enough."

In pursuance of equal footing, gay, lesbian, and bisexual investors have been seeking and "outing" corporations with gay-friendly policies and have been backing those companies in a show of financial clout. An example of the application of this forward social dynamic would be Trillium Asset Management, which has at least once scored a "perfect 10" on the Gay and Lesbian Values Index (glvindex). With an investment focus called Socially Responsible Investing (SRI), this company seeks to provide investment returns in keeping with industry standards, while at the same time maintaining "unique focus on social research and advocacy."

Corporations that have taken careful strides to bring their standards up to date with regard to societal equality appear to be gaining in popularity with gay and gay-friendly investors, as evidenced by their placement on and recognition of the glvindex. SC Johnson acknowledged it's high ranking on the glvindex in a company press release that stated in part: "To us, diversity is about building the best, most talented workforce that mirrors the marketplace, and motivating them with an environment that enables people to be themselves and contribute freely and effectively."

Former Fed Chairman Paul Volcker gave testimony today before a Joint Economic Committee of Congress. He addressed the current financial and economic environment and the role of the Federal Reserve.

He discussed how the financial market environment has changed considerably since his tenure as Fed Chairman in the early and mid 1980's. He pointed out that financial institutions like investment banks and hedge funds, whose failure can have tremendous effects on the financial system, are lightly regulated. "Systemically important investment-banking institutions should be regulated and supervised" in a similar manner to commercial banks.

Chairman Volcker stressed the need to update the entire regulatory framework, saying "It's not simply a matter of inexperience or technical failures." He also discussed the need to update regulations on a global basis because of the increasing coordination between world central banks.

Federal Reserve Chairman Ben Bernanke addressed the Federal Reserve Bank of Atlanta Financial Markets Conference in Sea Island, Georgia this morning via satellite. He discussed in detail the recent provision of liquidity by the Fed.

He discussed the shift in Fed monetary policy from its primary reliance on open market operations to lending tools used to address the credit crisis more directly. He mentioned the increased use of the Term Auction Facility (TAF) by commercial banks" from $20 billion at the inception of the program to $75 billion in auctions this month" and indicated that the Fed is willing to increase the use of these auctions as necessary.

He also discussed the extension of Fed credit to primary dealers through the Term Securities Lending Facility (TSLF) and the Primary Dealer Credit Facility (PDCF). He mentioned that extending credit to primary dealers was an extraordinary move driven by the potential for a scenario "in which a cascade of failures and liquidations sharply depresses asset prices, with adverse financial and economic implications." He indicated that although improvements in the credit markets have occurred, there are still substantial problems that remain.

Several leading business journals have reported that China has created its own regional jumbo jet company to compete with Boeing Co (NYSE: BA) and Airbus.

The Financial Times (subscription required) reports, "China has unveiled a state-owned aircraft manufacturer intended to eventually challenge Boeing and Airbus's control of the global market in large airliners." The Times characterizes the Commercial Aircraft Corporation of China (CACC) as "a significant step in Beijing's drive to create an advanced civil aviation manufacturing sector able to help meet the country's rapidly growing demand for regional and larger jets."

Reuters noted that, "many analysts have expressed skepticism about the commercial prospects of a large jet designed and manufactured entirely in China, given the country's limited experience in big aircraft." Not sure what analysts know, I'm skeptical just as much of them.

This weeks Barron's (subscription required) talks about The Next Warren Buffett. Of course nobody believes that's going to happen. The headline is cast to grab attention and sell papers, just like mine, but it's not happening: no way, no how!

The Federal Open Market Committee (FOMC) reduced interest rates by a quarter of a percentage point, taking the target Federal Funds Rate to 2% and the Discount Rate to 2.25%, as expected. However, the indication of at least a pause in interest rate cuts was not present. On the contrary, the Fed maintained its dire view of the economy mentioned in the March statement. The only positive indication that it gave was dropping the sentence "However, downside risks to growth remains." Two FOMC members voted against the rate cut as they did previously during the March meeting.

The stock market, which had been up by as much as 1% prior to the Fed announcement gave back all the gains and closed slightly down. Gold closed up slightly, and the dollar closed down.

What were the reasons that the Fed maintained this position and did not indicate a pause?

First, the Fed still believes that there is still substantial risk in the economy and further rate cuts could be necessary. There have been several positive economic and earnings reports lately and the stock market has drifted higher. If the Fed had signaled a pause, it may have been concerned that this could indicate an all-clear signal and ignite a rally. Negative news in the future and additional rate cuts might then be interpreted negatively. This could trigger a steeper falloff, increasing volatility. The Fed decided to take a cautious approach and manage investor expectations.

With economic reports and earnings numbers being released this week, we have been on a financial roller coaster. With regard to earnings numbers, we had General Electric disappoint, but IBM beat expectations and gave positive guidance for the future. Inflation numbers are high, but core inflation seems to be under control. The economy continues to deteriorate but does not seem to be falling off the cliff. How does an investor interpret all this? Is the glass half-full or half-empty?

The economy is clearly experiencing pain from the credit crisis. Even if we are not in a recession, it sure feels like one to the average person. Pessimism is the watchword of the day.

However, the big question is how much of this is already discounted by the equity market? I believe that the answer is that much of this is already built into market expectations. Unless we have another run on a major financial institution, the economy goes into freefall, or major oil supply disruption occurs, the market is already discounting most of the negative information.

In addition, we are approaching the November election. With a Republican in the White House and Democrats in control of Congress, no one wants to be blamed for a bad market or economy. The Fed is injecting a massive amount of liquidity into the system, and the tax rebates should be arriving shortly.

Does this mean a rally will arrive soon? It is a possibility. However, remember that the credit problems still remain. Any solutions will only be addressed after the election. The key variable is the rise in oil prices which is driving inflation. In the short term, it acts as a tax on the consumer and limits the Fed's options. As long as oil prices continue to rise, any rallies are likely to be muted and short-term in nature.

Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com and the author of Follow the Fed to Investment Success: The Effortless Strategy for Beating Wall Street. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.

Federal Reserve Board chairman Ben Bernanke inherited a real mess from Alan Greenspan and the Bush Administration who were all asleep during their watch when noteworthy financial minds Warren Buffett of Berkshire Hathaway (NYSE: BRK.A) and John Bogel, the founder of the Vanguard Group, and numerous other people of substantial financial knowledge and integrity were sounding the alarms.

'My pal Warren' went as far as to call derivatives toxic waste and the true weapons of mass destruction. In the design and construction industry we commonly hear the phrase, "There is never enough time to do it right but there is always plenty of time do do it over!" Perhaps it is a common refrain in other professions too.

Well today, the Fed Chief urged preventive action. This is a crying shame. I do not doubt his wisdom on this matter, unfortunately the horses have long left the barn and now he wants to close the doors simply to prevent the barn from collapsing. We will need the barn if we can ever round up those horses again. Mr. Bernanke was none too fast to react to the serious nature of our economic problems but he is plenty serious now.

Recently, former Federal Reserve Chairman Alan Greenspan announced that the country is currently in a recession and that "the U.S. economy will not stabilize until the housing markets recover." He compared this to the Savings and Loan crisis of the late 1980s and mentioned that another organization similar to the Resolution Trust Corporation (RTC) may be necessary to resolve the situation.

I have repeatedly highlighted the parallels between the late 1980s and our current crisis. Part of the solution may clearly involve an organization similar to the RTC. This has generated debate over the role of government in resolving the crisis and who should ultimately bear the cost. Nevertheless, based upon comparing this to the S&L crisis of the late 1980s, there is decent evidence that this crisis will not be resolved until the housing crisis abates.

We may want to examine the differing ways that the Japanese Banking Crisis and the Swedish Banking Insolvency of the 1990s were resolved for guidelines. Under the Japanese scenario, the banks were given a lifeline and hesitated to write down the bad loans. This resulted in one of the longest economic slumps and bear markets in recent history. Only now is Japan starting to emerge from this downturn, almost 20 years after it began.

Federal Reserve Chairman Ben Bernanke testified before Congress today on the economy, the credit crisis and the Fed's involvement in the sale of Bear Stearns to J.P. Morgan Chase. While much of the testimony summarized the Fed's recent actions and positions, there were several high points in the testimony.

First, the Fed Chairman discussed the possibility that the U.S. economy may contract in the first half of 2008. The market temporarily reacted negatively to this announcement and then rebounded. This was probably due to the realization that this also means that the Fed will continue to maintain a loose monetary and credit policy for the near future.

The Fed also showed how close to a global financial meltdown we came. The testimony detailed the reasoning behind the Fed's action to prevent the bankruptcy of Bear Stearns and facilitate its sale. It made clear that because of the interconnectivity of the world financial community, a bankruptcy could have resulted in a meltdown on a global basis, not merely one in U.S. markets.

Where there is fear, there is opportunity. Every day for the past six months some have asked if it was time to get back into investing in the financial sector. I was way too early and now much poorer for it. Whether I am too optimistic about our economic vitality, or just have no fear, or both, is a lingering thought in my mind.

Today marks the first day of a new quarter and there seems to be a lot of good will in the air. This even though UBS AG (NYSR: UBS) announced that it will write off $19 billion. UBS writedowns have reached a staggering $40 billion in the past nine months, the largest reported by any bank to date. As UBS Chairman Marcel Ospel stepped down, Deutsche Bank AG (NYSE: DB), Germany's largest bank, announced similar writedowns of about $4 billion.

Apparently, these losses by foreign banks have made Wall Street traders giddy as the Dow Jones Industrial Average was up over 200 points in early trading. Could this be the bottom? Well, I'm not going to call it -- I have no idea.

However, it is very consistent with the administration's tendency to use crises as a way to push its agenda. That's what happened in 2001 when it used the recession to push its $1.3 trillion tax cut. And then there's the biggest enchilada of all – using 9/11 as an excuse to attack Iraq – a move that's cost the lives of 4,000 soldiers and is forecast to take $3 trillion out of the U.S. Treasury.

I don't think the proposal will stand up for long but the deeper issue of what caused the problem and how to keep it from happening in the future remains. And while there are clear answers to either, I definitely think that serious analysis of these questions should be done before changes are made to the system.

The plan proposed by Secretary of the Treasury Henry Paulson to revise the United States' financial system is meant as an initial step in reforming the current regulatory environment and institutions. This would be the largest overhaul of the system since the legislation implemented by the Roosevelt administration during the Great Depression. It is needed to deal with current challenges posed by the recent credit crisis.

This is only a first step in the process. Many government agencies will be merged to create even more powerful agencies. However, the key element that stands out in Secretary Paulson's proposal is the new role of the Federal Reserve as a regulatory "Supercop." In essence, the proposal makes the Fed formally responsible for the risk management of our financial system. This would be the third mandate for the Federal Reserve after price stability and full employment.

In several ways, the Fed has already undertaken this role of guaranteeing financial market stability with its assistance in the sale of Bear Stearns (NYSE: BSC) to J.P. Morgan Chase (NYSE: JPM) and the extension of discount window lending to the investment banks acting as primary dealers. This would merely grant the Fed the regulatory authority necessary to do this on a formal basis.