Yesterday, we took a look at falling oil prices, and that trend has continued today, sending prices below the $100 mark. As we mentioned yesterday, the selling was coming as traders have turned their attention to demand, and that is the same story that we are seeing again today.

Right now prices are trading just slightly higher than the psychological $100 barrier, at $100.31, but only a short time ago prices had retreated all the way down to $98.65.

One thing that we always like to keep track of is the weekly inventory reports from the U.S. Department of Energy. These reports are typically issued each Wednesday, and going into yesterday's report analysts had been looking to see a rise of 2.3 million barrels. While the market was given news of rising inventories, the numbers were actually much lower than had been expected, with an increase of 200,000 barrels.

The Economist reports that the Federal Reserve is now doing something that it has done during the Great Depression and in the 1960s -- put its own capital at risk to keep the banking system from collapsing. The Bear Stearns Companies (NYSE: BSC) saw its stock lose 47% of its value today because no other banks will do business with it.

The Fed is creating the illusion that it is not bailing out Bear Stearns by using JPMorgan Chase & Company (NYSE: JPM) as the conduit through which its bailout will flow. JPMorgan will assume the Bear Stearns collateral and will forward the Fed's capital to Bear Stearns -- but this will only last for 28 days. Here's one way that the Fed is putting itself at risk -- if Bear Stearns' collateral declines in value, the Fed -- not JPMorgan -- will take the hit.

This move is not the first one that puts the Fed at risk. Earlier in the week, the Fed put $200 billion on the line and agreed to take Mortgage Backed Securities (MBSs) as collateral for those 28 day loans. Once again, the Fed is assuming the risk that the MBSs will retain sufficient value to protect the Fed's loan. But many questions remain:

There has been so much crap thrown around about whether WE ARE in a full blown recession OR NOT that all the talk, is just that -- a lot of talk. Long time investors know well that if there is anybody left that thinks we are not in a recession than we have not reached final capitulation.

If we do not reach this level of pain, then we cannot get better. Admitting the problem is a major path to recovery. That is true for an alcoholic and our ailing economy. As long as the alcoholic keeps saying they can handle the problem, its not going away.

Our economy is drunk and falling over. You can call our current economic crises a "rose" for all I care, and for those that want to wait for the classic two quarters of negative growth to appear you can consider yourself followers not leaders. Leaders take action and try to avoid a crises. Followers, wait until there is a crises... and historians document and report on the difference between the two.

Oil prices have once again set a new record today, with prices moving as high as $97 a barrel earlier in the session, and are currently trading up $2.73 to $96.63.

Today's move comes as traders are becoming increasingly worried about supply concerns as winter weather has finally started moving across the Northern Hemisphere. So far this year, mother nature has spared us from onslaught of wintry weather, but now that is changing, and the market is reacting. The past two weeks we have seen greater than expected declines in crude inventories in America, and analysts are expecting even more drops to be announced tomorrow when the Department of Energy releases its weekly inventory report.

Analysts are expecting to see a drop of 1.6 million barrels, and if we get reports of anything greater than that I would not be surprised at all to be sitting here writing about oil at $100 before the week is out. Consider this, before last week's report, prices were trading down to around $90.50, so a move from current prices to the psychological $100 barrier is not by no means out of the question.