Bill Bonner says the Fed will make this slump longer and harder than it should be. Bernanke & Co are using every weapon in their arsenal to prevent deflation. But they tried this during the Great Depression. And Japan tried it in the 90s. And both times they only managed to deepen the pain.

The Treasury’s plan to inject $250 billion in capital directly into US banks is underway. But William Patalon III says some of these taxpayer funds will be used by big banks to acquire junior competitors. This means the increase in lending that the plan is supposed to spark will be modest at best. And less competition in the banking sector could mean a rise in fees going forward.

Public pension funds are some of the biggest casualties of this market slump. The New York state pension fund has lost 20% of its value since April. This is more bad news for baby boomers, says Bill Bonner. This generation is already “woefully ill-prepared for retirement” and could end up causing the “fiscal meltdown of this nation”.

We are not going to see the world’s best businesses this cheap for a long time, says Dan Denning. He says it’s not hard to imagine another round of global rate cuts and a massive stimulus package in the US. And then there is the ‘Obama effect’. In other words, if you don’t want to own these equities now, why bother being in the market at all?

There is no longer any doubt that we are heading for a deep, deflationary recession. But James Howard Kunstler is more worried about the “tidal wave” of monetary inflation that will follow. With the financial landscape washed clean, the economy will need to be rebuilt on productive enterprise.

Could we be about to enter a global depression? Bill Bonner thinks there is a good chance. The Dow is heading to 5,000. The US is falling into recession, and the Fed is making it worse. Businesses are cutting their workforces. Consumers are staying at home. And global trade means this slump in demand will hurt producers all over the world.

Will November’s emergency global financial summit result in a “new global financial order”? European leaders are pressing for a fundamental change in the US-centric monetary system. Jason Simpkins says a similar crisis meeting in 1944 gave birth to the Bretton Woods gold standard. But there are reasons to doubt such a major reform this time around.

The government can - and will - throw money at this crisis. But it won’t make losses go away, says Bill Bonner. At some point, someone will have to write these down. All of them. That’s why Bill sees a short-term rally in stocks, followed by another crash.

Reuters reports that the U.S. government will have to pump “much more money into banks than the $700 billion it has committed if they are to survive the downturn, even if the cost is a tough pill for taxpayers to swallow.” Something Hank Paulson failed to mention on his recent interview with Charlie Rose.

It wasn’t fears of default that froze interbank lending this month, says Martin Hutchinson. Top quality banks were paying the same interest as the most vulnerable banks, as the entire sector was forced to deleverage. Martin says the US Treasury’s $250n capital injection should help the market identify the strongest banks. Once that happens, expect these stocks to rebound strongly.