Then we have a second economy made up of the unemployed and persons living on the edge of disaster. Here we see a growing number of credit card and home equity delinquencies. These people are in a downward spiral. Having lost their jobs, they are using credit cards to survive. This leads to double trouble -- no money and default on credit card debt and home mortgage.

Bank failures are good. They get rid of banks that are mismanaged and have no business being in banking. Bad management at many banks made lots of bad loans and deserve to go under. The biggest example was Washington Mutual. And Countrywide belongs in there as well. Of course, there are a large number of smaller, community banks that also made bad loans that won't make it either.

That's OK. In fact, it makes the banking system stronger to have these marginally-managed or poorly-managed lenders gone. They artificially hike up the cost of deposits for all banks as they struggle to finance their bad loans, whether they're housing or commercial or business. Bad banks need more cash to keep them going, so they bring in more deposits. They bring in more deposits by raising rates.

Neal Berger, the fund manager who called the market top, founder of fund-of-funds Eagle's View Asset Management, is always seeking undiscovered fund managers who exploit a legitimate "edge" or inefficiency in the market. With decades of experience at prominent firms such as Fuji Bank, Chase Bank, and Millennium Partners, he now manages the investments of wealthy families/individuals.

In running a very tight stock screen recently for value plays Burlington Northern Santa Fe (NYSE: BNI) showed up on a list of 14 stocks. Interestingly all the large railroad stocks did. This reminded me of several stories I have done on the subject, the most recent being Chasing Value: Watch BNI -- the heck with Citigroup.

To summarize, about six weeks ago a Citigroup (NYSE: C) analyst declared it was time to sell the stock when BNI was trading in the mid $60s -- I said investors should do the opposite, it was a great value. Friday the stock closed at $76.98. Even at this price it is a value and ever more so with oil prices steadly creeping up.

With a sleight of hand, the Financial Accounting Standards Board gave banks a way of hiding their losses, at least for the time being. What was this sleight of hand? With powerful lobbying by 16 industry association groups who call themselves the Fair Value Coalition, a proposal to use "mark to market" to price the value of distressed assets was killed. Congress, it seems, bowed to the lobbyists and complained that the existing "mark to market" standards worsened the financial crisis. So what is the new rule? Who knows? Its hard to figure out exactly what standard banks are using to price distressed assets.

Downtrodden Citigroup Inc. (NYSE: C), which received its walking papers from Dow Jones on Monday, has informed five of its former executives that they'll no longer be receiving severance payouts. According to a report today in The Wall Street Journal [subscription required], recently departed executives Kevin Kessinger and Michael Klein will be among those affected by the decision.

Already, Citi has doled out approximately half of the $100 million it pledged to these former execs. The U.S. Treasury hasn't demanded that the severance payments be halted, but sources close to the bailed-out bank say that Citi's top brass "[want] to avoid even the possibility of a public backlash over the money."

Even though it would seem that Citi is finally getting a handle on the concept of money management -- or public relations, at the very least -- investors are hardly cheering. The stock has given up more than 3% today, extending its year-to-date drop of 45%. In fact, the shares are currently in position to finish the session below their 10-day and 20-day moving averages, which would mark the first breach of this double-barreled support since May 1.