We live in amazing times. Consumers are earning more; at least the ones with jobs. They are also saving more than they have in the last 15 years. The savings rate, which was hovering near zero in early 2008, surged to 6.9 percent, the highest level since December 1993. I think that is fantastic!

Ben Franklin said, "A penny saved is a penny earned". If that is true, then people are improving their economic condition day by day. Strange as it might seem, the government is troubled by this.

The government and many economists are worried that without greater spending by consumers any economic recovery will be stalled that much further. During our recent manic economy, over the past decade, consumer spending was responsible for about 70% of the GDP.

I say to all my readers, let others spend -- YOU KEEP SAVING -- and reducing debt. You will be glad you did. The consumer led economy was a false economy. The world is mourning the sudden death of Michael Jackson who passed away yesterday from yet to be determined causes leading to cardiac arrest, reportedly $400 million in debt. You think he was under any stress?!

While in an airport bookstore recently, this title caught me eye: How to Build a Business Warren Buffett Would Buy: The R.C. Willey Story.

How could I resist? I bought a copy and read the whole thing on my flight (OK, the book is only 192 pages).

The author of the book, Jeff Benedict, tracks the entrepreneurial career of Bill Child, who transformed a furniture business -- R.C. Willey -- into a retailing giant (he came on board the company in the mid 1950s when his father-in-law died).

The credit crunch has pretty much brought the private equity industry to a halt: Without access to cheap, readily available, debt with liberal terms, the leveraged buyout shops lack the paper they need to get the deals done.

But the Wall Street Journal reports (subscription required) that some firms are now trying "equity buyouts" or EBOs -- deals that involve taking companies private without the use of debt. With companies available as cheap as they are now, some titans are betting that they can earn excellent returns without the leverage the has historically led to outsized profits.

Portfolio reports on the hedge funds and other money managers that are looking to make a killing buying up those badly beaten down, highly illiquid mortgage assets that have been the ruin of so many of the world's largest financial institutions.

According to Portfolio, "There are now ample opportunities for distressed-asset investors. . . Prices for such securities are very low, even considering the awful state of the economy. That's because the market for mortgage-backed securities is flooded with sellers, as banks, hedge funds, and other investors in collateralized-debt obligations, or CDOs, head for the exit."

Mall operator General Growth Properties, Inc. (NYSE: GGP) has seen its share price plunge more than 98% during the past year, with the equity recently plummeting into penny-stock territory amid concerns about a possible bankruptcy filing. Maybe I'm just an impatient member of the MTV generation, but it struck me today that these Chapter 11 rumors have been swirling around Wall Street for what seems like ages. Can we get some closure on this soap opera, GGP?

Well, according to a report today in the Wall Street Journal, GGP's deadline to renegotiate a $900 million loan on two luxury malls in Las Vegas came and went Thursday with no resolution. The mall mogul is still in talks with its lenders to negotiate a new deal -- but it's now haggling outside the confines of its forbearance agreement, which means those lenders, led by Deutsche Bank (NYSE: DB), can demand payment at any time.

The New York Times is reporting this morning that the Chinese government may be losing its ability and desire to support low interest rates in the United States by continuing to purchase treasury notes in the hundreds of billions of dollars.

Just as President elect Obama has stated, the economy 'could become dramatically worse.' News from overseas lends credence to our dilemma. The NYT quotes Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland: "All the key drivers of China's Treasury purchases are disappearing - there's a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates."

Under normal conditions, during the last decade China has acquired over a trillion dollars of our debt and kept it. This has supported the dollar, kept us buying their goods, and in turn propelled the rapid growth of the Chinese economy. Fitch Ratings, the credit rating agency, forecasts that China's foreign reserves will increase by $177 billion this year. However, this would be a large drop from an estimated $415 billion accumulated last year.

In my Top 10 Stocks to Avoid in 2009, I suggested that investors stay away from stocks impacted by a handful of specific themes that will play out during the coming year.

Stocks impacted by higher fuel prices, a stronger U.S. dollar, and high defaults in the credit card space should be investment afterthoughts in 2009.

One theme that did not make the list, and probably should have, are companies with so-called debt bombs set to go off at some point during the next year. There are many businesses that have big debts coming due in 2009.

With the credit markets in disarray, the likelihood of obtaining new loans to replace old debt is difficult at best. As such, companies must obtain concessions from bond holders or run the risk of going into default. Whatever scenario plays out, the result is likely to be negative for common shareholders. With so much risk, it makes little sense to venture into stocks with these issues outstanding.

When you have a trading day like today and it comes after a week like this week, it is hard to determine if you are happier that the rally came on at the end of the day or if you are happier that the closing bell came to end the week. The markets closed down today but today felt like a win when you consider the 400 point move higher off of late day lows in the last hour. There are hopes of a coordinated G7 announcement this week along with some fresh hopes that the Treasury will make new banking injections and help in the LIBOR woes. The bond traders left at 2:00 PM early for Columbus Day, and the bond market is closed Monday.

Here are the unofficial closing bell levels, and remember that the exchange takes much longer to find actual close levels right now:
DJIA 8,477.40 -101.79 -1.19%
NASDAQ 1,649.51 +4.39 +0.27%
S&P500 901.24 -8.68 -0.95%
10YR T-NOTE 3.861% +0.027%
Top Analyst Upgrades

Barclays plc (NYSE: BCS) fell on reports that the financial bank giant is considering raising capital as part of the government's bailout package in the UK. Shares were down 9% at $14.66 in the final minutes before the close.

Washington Post business columnist Steven Pearlstein does not mince words: too many people just don't get it.

Moreover, yours truly is not one to alarm, and typically views 'sweeping and dramatic statements' with a journalist's skepticism and a scholar's critical review.

But when the best economists you talk to, and business executives, and others in financial and investment circles, start reaching the same conclusion, from decidedly different vantage points, the dramatic statement begins to take on more weight, becoming more compelling.

'The reality of the facts on the ground'

Further, as Pearlstein incisively points out, there are reasons why a considerable portion of the American people are not 'getting it' regarding how serious the current situation is. Politicians are more concerned about ideology, partisan posturing, and teaching people a lesson -- if you can believe that they could be so irresponsible (my astonishment added, not Pearlstein's). Financiers have been very slow to admit to greed, arrogance, and incompetence. And foreign government leaders still view the financial crisis as 'an American problem.'

But none of the above changes what Pearlstein, and what my closest economist colleagues (David H. Wang, Richard Felson, Peter Dawson, M. Chandler, and Glen Langan) all argue is "the reality of the facts on the ground," to borrow a phrase from Israel's former Prime Minister and Defense Minister Ariel Sharon. Namely, that a massive, global deleveraging is taking place, and that absent a systemic rescue/intervention by the U.S. Government, in conjunction with interventions by other governments around the world, the world risks the bursting of a credit bubble that threatens to bring down the global financial system.

Warren Buffett is becoming concerned that the national debt may present a crisis much greater than the one roiling the credit markets. In a forum with other economic experts, he expressed doubt the U.S. could handle the $53 trillion it has committed to spend.

According to Reuters, the group said that "the United States has become too dependent on foreign investors to buy its goods and its publicly-issued debt." Most of America's debt commitments are for Social Security and Medicare.

Buffett may be wrong. It may just be the recession talking. The government's ability to pay its own debt is dependent, to some extent, on the size and taxability of the nation's personal and industrial earnings base. During a slow economy, that pool drops.

One of the most obvious solutions to the problem is to get large companies to pay more taxes. Many move money overseas to nations with lower tax bases. Legislation should be passed to stop that.

As the economy moves back to growth, tax revenue will increase on its own and Buffett may be able to sleep better at night.

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

What will it take to break the downward cycle for the U.S. stock market and its economy? Get back to our roots as a country that lives within its means.

The source of the problem is that we have gotten away from the idea of paying only for things we can afford. To close that affordability gap that results from lower income and higher prices, we have borrowed money -- $9.3 trillion in federal debt, a $410 billion federal budget deficit, and $2.5 trillion in consumer borrowing -- which has caused other countries to view the dollar as a distress currency. It's lost 72% of its value since January 2001 -- when it traded at 92 cents to the euro.

Having spent the last two weeks in Europe, that weak currency hurts -- everything seems to be about 50% more expensive there than it is here. Gasoline there is far more expensive than it is in the U.S. -- roughly $9.60 a gallon compared to $4.25 here. And the reason that our stock market is dropping while oil rises is a result of deliberate government policies designed to weaken the dollar and strengthen oil.

The New York Times reports that some in Washington are using the latest economic catastrophe to push Congress to make tax breaks permanent. What these folks don't recognize is that the tax cuts are a big reason why the economy is in such bad shape to begin with. With unemployment spiking to 5.5%, the worst since 1986, and oil prices up a record $11 yesterday to $138 a barrel, it won't be long before you're paying $5 a gallon for gasoline.

And since oil is traded in dollars, its 70% decline since January 2001 from 92 cents to the Euro to its current $1.56 -- has been accompanied by a 475% rise in the price of oil. The $1.3 trillion worth of tax cuts -- 36% of which went to the top 1% -- are contributing to record deficits. In 2008, we'll have a $410 billion deficit and the 2009 figure looks to top $500 billion. And thanks to $3 trillion worth of wars, the U.S. is borrowing $9.4 trillion -- almost double where we were in 2000.

Thanks to these deficits, the U.S. is borrowing 66% of its $14.2 trillion GDP -- and any country borrowing more than 60% is seen by international investors as a credit risk. You'll hear people trying to convince you that deficits don't matter. But deficits are at the core of all the economic problems we face. Republicans used to be seen as the party of fiscal conservatism. But what they've actually done would terrify a prudent banker.

I've been very wary of market conditions over the last six months. I've taken the bear position for better than a year now. Today however, I am seeing a convergence of conditions and circumstances that lead me to question whether the gates have again been thrown open for the bulls. Make no mistake about my position on the economy from a consumer standpoint. It's real ugly out there and I'm not too happy about that. However, I've seen it worse in my time and for now, we still live in a world where good hard work and some personal responsibility can accomplish a lot for a person.

There are several things that I now find promising for the investment world. First, the answer to the question of the Democratic presidential nominee is all but cemented. That's one big monkey off the nation's back. Second, the Federal Reserve has subtly come out in favor of protecting the dollar. I do understand more now about why the Reserve Board took the path that it did, but I still think that interest rates need to come back up a little. Third, our nation has shown that it can indeed reduce it's driving habit in short order. Fourth, manufacturing numbers have not declined as quickly or as deeply as I expected. Finally, I think the downward slide of real estate values is slowing and shall soon stabilize, but there are still a lot of mortgage notes yet to crumble.

I know that the stock markets and the overall economy are inextricably connected, I also know that they are two very distinct worlds. That is why I feel that the markets could surge while things at the consumer level still look very grim.

If the price of crude oil can be reduced and stabilized, if we can reverse the downward trend in employment, and if this country's citizens can repay their debts rather than defaulting on them, I see a bull market on the horizon. What do you think? Should we aim the DJIA upward again?

Gary Sattler is a freelance blogger. He spent most of his economic stimulus check on a much needed new refrigerator.

You know, I can't take much more of the financial crisis. That's because I own Newcastle Investment (NYSE: NCT) and CapitalSource (NYSE: CSE). I'm kind of hoping we get out of the mess brought on by the housing-bubble pop and the mark-to-market devaluation so that these stocks will rise again. As we continue through this recession, another problem may soon assert itself.

According to this article, consumers are starting to rely on their credit cards a little too much. This could lead to a larger quantity of delinquencies. In fact, the piece states that card delinquencies were at 4.86% in Q1, a multi-year high. Further, revolving debt increased 7.9% in March, coming in at $957 billion. Not too far away from a trillion, my friends. Let me tell you, this is the last thing we need right now. Delinquencies will become a major problem for the banks, leading to further erosion of confidence on financials by investors.

As can be expected, two ideas immediately came up during the course of the article: Visa (NYSE: V) and MasterCard (NYSE: MA). How could they not? If people are taking credit debt, then they must be using those two brand names. Since Visa and MasterCard don't really have exposure to the debt side of things, they are relatively safe from that aspect.

NetApp (NASDAQ: NTAP) shares are falling after the company announced it will sell $1.1 billion in five-year convertible senior notes to institutional buyers. Terms of the debt were not disclosed. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on NTAP.

After hitting a one-year high of $33.84 last June, the stock hit a one-year low of $19.00 in March. This morning, NTAP opened at $23.48. So far today the stock has hit a low of $22.90 and a high of $23.88. As of 12:10, NTAP is trading at $23.85, down $0.11 (-0.4%). The chart for NTAP looks bullish but deteriorating, while S&P gives the stock a neutral 3 Stars (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in three and a half months as long as NTAP is below $30 at September expiration. NetApp would have to rise by more than 25% before we would start to lose money. Learn more about this type of trade here.