The recession, which officially began a year ago, is accelerating the pace of job loss. Since I began to notice the collapse of subprime back in the fall of 2006, watching the economy implode has been like a huge highway pileup in slow motion. And that crash is starting to create big economic injuries in the job market.

How so? Firing announcements rose 148% in November 2008 to 181,671 -- the most since January 2002 -- from 73,140 in November 2007. So far in 2008, the number of cuts has spiked 46% to 1,057,645, surpassing 1 million for the first time since 2005. And many of these cuts have come from financial services (91,356), computer and electronics (15,350), and retailing (11,073).

Having lived through two credit contractions, I could see this coming from miles away. But it happened far more slowly than I thought it would. And I did not foresee how the bad mortgages would cause a global financial crisis. But they have and here's how: $1.3 trillion in subprime mortgages were added to packages of complex securities, including $13 trillion of mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs).

Most analysts believed that Bank of America (NYSE: BAC) would cut about 10,000 jobs in its consolidation of operations with Merrill Lynch (NYSE: MER) which it bought earlier in the year. That would be enough people to hit the promised cost saving for putting the two firms together. It is a lot of people out of work, but not a blood bath.

Well, it looks like the blood bath has come and no one appears to have expected it. According to CNBC, "Bank of America could end up cutting 30,000 jobs as it moves to absorb Merrill Lynch, three times as many as previously estimated."

Did Bank of America mislead its employees, the press, and investors? Perhaps, but it may have done so for all of the right reasons. Predictions now are the B of A will lose a lot more money than most observers expected a month ago. It faces huge write-offs in its real estate and consumer credit portfolios. That may mean the firm could be faced with having to raise more money and dilute current shareholders. It could also hurt the bank's chances of maintaining its dividend and current share price level which is already down from a 52-week high of $47 to just above $14.

The new layoffs are not good for the poor people who will be hitting the exits, but the news may add weight to the impression that bank earnings for the current quarter are falling apart fast.

Douglas A. McIntyre is an editor at 247wallst.com.

It would be pretty nifty to bank online with Goldman Sachs (NYSE: GS). It is the world's premier investment bank, although it has converted itself to a commercial bank to get government funding.

Still, saying I bank online with Goldman sounds better than saying I bank online with the First National Bank of Akron Ohio.

According to The Wall Street Journal, "If Goldman goes ahead, the new unit will seek deposits that can be used to fund various businesses now that Goldman is a bank-holding company." In other words, now that Goldman is a bank, it wants to drive up deposits. Starting an online bank is cheaper than going out and buying a number of regional banks to pick up their depositor bases.

All kidding aside, the chance to have an account at such a prestigious financial institution could draw a great deal of money, especially from the well-to-do. A marquis name should make for marquis customers. And, that should bring Goldman a lot of the assets it needs to fund its more profitable businesses.

Douglas A. McIntyre is an editor at 247wallst.com.

Last week, Bank of Montreal (NYSE: BMO), one of Canada's oldest and largest banks, reported growth in its fiscal fourth-quarter earnings. But it may be the only one that does, as at least two of the Canadian banks scheduled to report fourth-quarter numbers this week have already released preliminary results that warn of lower earnings due to debt write-downs and trading losses.

Analysts surveyed by Thomson Reuters expect Toronto-based Canadian Imperial Bank of Commerce (NYSE: CM) to post earnings 42.6% lower than a year ago, or $1.28 per share. CIBC beat estimates by a penny in the third quarter, but missed by a penny in the period before that. The bank faces a class-action lawsuit related to investments in collateralized debt obligations consisting of U.S. subprime mortgages. Shares have climbed 20.7% from a recent 52-week low of $39.52, but are down 37.8% in the past three months.

Toronto Dominion Bank (NYSE: TD), Bank of Nova Scotia (NYSE: BNS), and Royal Bank of Canada (NYSE: RY) are expected to report more modest earnings declines of $1.01 per share, $0.73 per share, and $0.83 per share, respectively. All three Toronto-based banks topped estimates in the third quarter. Toronto Dominion and RBC have recently announced plans to offer shares in order to raise capital. Toronto Dominion and Scotiabank have been trading near 52-week lows, and their share prices are down around 39% in the past three months. But only Toronto Dominion has a consensus buy recommendation from analysts.

Patience is a behavioral virtue in more ways than one.

Billionaire investor Warren Buffett's bank-related investments increased 36% in Q3, while the Standard & Poor's 500 Financial Index declined 0.2%, as Buffett's subprime lender-avoiding strategy shielded him from losses in the sector, according to Bloomberg.

The rewards of waiting

Patience appears to have been a key to Buffett's impressive performance in the financial sector.

"In a word, I can sum it up: patience," William Frels, CEO of Mairs & Power Inc., told Bloomberg News. "Warren has the luxury of being able to exercise patience." Mairs & Power Inc. also holds some Berkshire stock in client accounts.

Shares of Berkshire Hathaway (NYSE: BRK.A) rose $3,100 or 3.22% to $99,550 on Wednesday at mid-day.

Economist David H. Wang said Buffett's results speak for themselves. "I wish he was managing my portfolio," Wang said. "Seriously, the results have to bring into discussion again the inherent problems of quarterly reporting. There has been much debate regarding how quarterly reporting influences corporate operational decisions, to the detriment of long-term business operation performance. Now we are getting more and more evidence that quarterly reporting may be hurting investment fund performance, as well." Wang added that he does not own shares of BRK.A.

In October, I suggested that one way out of the mess we're in is to create 100 new banks that would be unencumbered by all the bad bets that incumbent banks have made. Back then, I thought that such a plan would create banks that people would be more confident to do business with. Now, the Wall Street Journal has come along with a similar proposal. I am glad for the company and only wish it had come along before so many hundreds of billions had been added to the so-far dubiously successful bailouts.

The advantages of creating new banks outweigh the disadvantages. Sure, the new banks would give some customers the jitters due to their novelty, and if they were successful, they would speed up the demise of the weaker banks. But on the plus side, if the new banks were adequately capitalized and tightly monitored, many depositors and borrowers would flock to these new banks since they'd be free from all the bad assets that currently crimp many existing ones.

Moreover, among all the recently unemployed bankers, there could be some talented and ethical managers who might be willing and able to take over these new banks and happily recruit some of their colleagues from the weaker incumbents to these growing new banks. Eventually, the failing banks would shrink and could quietly liquidate -- but not before their customers had made the successful journey to the new, healthy banks. While this is not a perfect process, it seems better than throwing hundreds of billions in taxpayer money at banks that will eventually fail anyway.

I think this is an idea whose time has come.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008.

Can someone please stop Hank Paulson from wasting more taxpayer money? Steve Forbes -- a failed 2000 presidential candidate I met a few weeks after 9/11 -- has called Paulson the worst Treasury Secretary in modern times. Now, Paulson wants to launch the fourth reincarnation of the Troubled Asset Recovery Plan (TARP) by buying securities consisting of bundles of consumer loans. In his effort to appear to be helping consumers, he is simply launching another failed Wall Street bailout.

Here's how I view the four reincarnations of TARP:

• TARP 1.0 was to take $700 billion to buy toxic waste from Wall Street in reverse auctions. As Paulson said, America needed to pass this plan to avoid heavenly retribution. But the plan was DOA for reasons I posted about here.
• TARP 2.0 involved buying equity stakes in banks -- the U.S. spent $159 billion for preferred shares in 24 banks. But the banks are holding onto the money and not lending it out. Perhaps they'll use it to pay $26.6 billion worth of bonuses. That's rich -- using taxpayer money to help out the people who got us into this mess.
• TARP 3.0 was the plan to cover losses on $277 billion worth of Citigroup 's (NYSE: C) toxic waste while using $20 billion in cash to buy $27 billion worth of preferred stock yielding 8% along with warrants on 254 million shares at $10.61. Expect more of these deals as Citi competitors complain of a tilted playing field and Paulson scrambles to accommodate them. But with Citi, the U.S. protected Prince Alwaleed's common shares, other banks might not be so lucky.

No mainstream economist or analysts thought the United States financial system and economy would ever face circumstances like these, but fundamentals and a negative spiral have worsened to such a degree that the nation may have to implement a temporary, home mortgage foreclosure for all mortgages, according to an economist.

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have already announced a six-week halt to foreclosures and evictions through the holidays, lasting until January 9, to give the servicers time to implement their own program for at-risk mortgages, Bloomberg News reported. The government-sponsored enterprises own or guarantee $5.2 trillion of the $12 trillion U.S. home mortgage market.

National moratorium needed?

Economist Richard Felson told BloggingStocks a national moratorium on the remaining roughly $7 trillion in mortgages would give the incoming Obama Administration time to play-catch up, after the Bush Administration's underperformance on a universal, streamlined mortgage refinancing program. If implemented, the plan would end the rise in home foreclosures that's causing the securities defaults that are elongating the financial crisis.

Citigroup (NYSE: C) got a bailout from the government, but is the deal big enough to save Citi? This deal sounds like an interim solution rather than a permanent one. That's because after losing $20 billion in the last year, Citi has $2 trillion in on-balance sheet assets; another $1.23 trillion in off-balance sheet assets; and $36.8 trillion in derivatives. It is likely that the losses from these financial WMDs could exceed the amount Citi got from the government.

What does Citi get? Under the terms of the deal, Citi gets $20 billion in cash from the government (on top of the $25 billion it already received); Citi must cover the first $29 billion in losses of a $306 billion pool of assets -- the government picks up 90% of the remaining losses with Citi covering the other 10% from its mortgage-related assets; and Vikram Pandit gets to keep his job. The Treasury Department will use TARP to cover the first $5 billion of losses; the FDIC will take on the next $10 billion; and the Fed will assume any additional losses.

What does the U.S. receive? The U.S. gets $27 billion in preferred stock yielding an 8% interest rate. And that preferred stock comes with warrants to buy 254 million shares at $10.61 each. Citi must also pay no more than a penny a share dividend for three years -- down from 16 cents recently. The U.S. also negotiated executive compensation restrictions.

One of the ironies of public officialdom is that those elected officials who deal with budgets and tax policy rarely fully grasp the economic sea changes when they occur in the nation.

Whether it's due to habit, tunnel vision, groupthink, arrogance, ignorance, surrounding yourself with sycophantic staff, or some combination, congressional lawmakers are often the last to notice economic shifts that occur cyclically.

January 2009: A new era begins?

One of the key economic questions for investors and other stake holders is whether President-elect Barack Obama follows through with his campaign promise to be an eclectic, someone who tries a center-left policy here, deploys a center-right policy there because it works, and who does not implement typical party -- or partisan -- responses to problems; i.e., solutions from traditional sources of power in his party.

But an even more-telling economic question concerns what the Republicans will do. In November 2008, the Republican Party suddenly found out that it was very white, male, old, Protestant, and by-and-large economically and fiscally conservative. The aforementioned guarantees in the years ahead that they'll hold at least 20 or 25 Senate seats in a chamber of 100, and if they're not careful, about the same percentage of House seats. Meanwhile, the nation's electorate is increasingly nonwhite, female, younger, non-Protestant, and by-and-large economically and fiscally moderate, and in some cases, liberal/progressive.

With credit markets remaining under stress, and with uncertainty growing regarding the status of megabank Citigroup (NYSE: C), the U.S. Congress may have to take more action to maintain financial system stability and prevent the U.S. economy from spiraling into a deeper recession, so says economist David H. Wang.

"The U.S. Congress may have to approve a 'TARP 2,'" Wang told BloggingStocks Friday. "Whether Congress does it as part of a fiscal stimulus package, or separately, it is clear we will need more money to purchase toxic assets, improve bank capitalization and allocate funds for home mortgage refinance programs, and other financial stabilization measures. At this stage of the crisis, the $700 billion TARP is not going to be enough, in my interpretation."

Bank sector stress remains

Wang said that if Citigroup, whose CEO Vikram Pandit said has adequate capital, for some reason cannot, when needed, find additional capital in the private sector, then "the Fed and or U.S. Treasury will step in, and take necessary measures to stabilize the bank," Wang said. If the U.S. Treasury is the primary funder, "that action, and other forthcoming, planned actions by the Treasury may use up a considerable amount of TARP funds, requiring a TARP 2."

Once again, Dow 8,000 has come back into focus.

For those investors who may not follow indices closely, the 8,000 level has a psychological but not technical support, the latter of which measures such things as the number of investors who are buying / selling, whether investors are committing more money to the market etc.

Even so, right now, a battle is taking place between the bulls and the bears: the bears argue the worst economic news stemming from the financial crisis is yet to come; the bulls argue that the worst news is behind us, and that government stimulus, fiscal and monetary, will get the U.S. economy moving again.

The Dow Jones Industrial Average Wednesday closed below 8,000 at 7,997. If the bears can keep the Dow below 8,000 and then push it through 7,800, then 7,600, it will not be a pleasant time for investors.

Let's do a condensed, cross-methodology analysis to see if we can arrive at an informed investment decision / conclusion regarding where the Dow is headed, near-term.

"Too big to fail" has acquired an entire new meaning in the context of the global credit crisis. Now the statement needs to be and has been applied to the entire economy.

Financial services companies, automotive manufacturers, insurance companies, retailers, airlines, high-tech companies and others are all in line to benefit from the Troubled Asset Recovery Program (TARP).

Investors need to pay close attention to the industries being aided by TARP and the specific companies within those industries that actually receive those benefits. Those that receive a portion of the largesse become subsidiaries of the U.S. Treasury, with all the implications that has for the survival of those companies.

There are already winners and losers of this process. Winners are those companies that receive TARP support, and the losers are their competitors.

Sorting through the list of beneficiaries of the taxpayers' assistance reveals that many of these companies have still not gained the approval of their plans from the Treasury. The options are numerous and will continue to evolve during the coming months.

Bonuses for a U.S. Government-rescued Wall Street should take on a 'slightly' leaner tone, according to a sampling of U.S. taxpayers by Bloomberg News. The taxpayers' judgment regarding how large the bonuses should be? Zip. Nothing. Nada. Niet.

Wall Street, which created many of the Frankenstein-like financial instruments that either distorted and/or hid loan risk, and also in some cases encouraged the issuing of problematic mortgage forms, is not justified in paying bonuses, and certainly should not award them following the government's massive $700 billion bail-out of the industry, a sampling of U.S. taxpayers indicated.

One U.S. resident, Ken Karlson, a 61-year-old Vietnam War veteran who lives in Illinois told Bloomberg News, "I may not understand everything, but I do understand common sense." He added, "the bailout money should not have been given to them in the first place."

Economist Richard Felson told BloggingStocks Tuesday acrimony from U.S. citizens is not outlandish or unreasonable given the facts to-date of the current financial crisis.

Policy makers and bank officials are hoping it's just a Monday 'pause that refreshes.'

Short-term interests notched a mixed day on Monday, as the London rate for three-month loans in dollars declined for the 24th consecutive day, dropping another 6 basis points to 2.24%.

However, the three-month rate is still 124 basis points above the U.S. Federal Reserve's target interest rate. Further, the five-year average for the three month rate is 22 basis points. In addition, the overnight rate, or LIBOR, rose 2 basis points to 0.35%.

Also, the difference between what banks and the U.S. Treasury pay to borrow dollars for three months, the TED spread, fell another 6 basis points to 170 basis points, which is down from 387 basis points on October 10.

However, the TED spread was 87 basis points before the Lehman Brothers bankruptcy, and the current rate is still 159 basis points above the 11-basis-point, five-year average.