We now have a new President, the 44^th in our short history as a nation. It could not have come at a better or worse time depending on how you view it. Mr. Obama has a tough road ahead but seems to be energetic enough that perhaps he can start some things moving. I say worse because the speed and rapidity with which the world economies are plunging is not good. We wish him well and pray for all the wisdom, patience and fortitude necessary during these troubling times.

Things are truly astounding as we watch the banking system move into round two. This is not an isolated problem; we spread to our greedy bank friends around the world. Royal Bank of Scotland (RBS Bank), the venerable, old, staid and previously solid bank, just announced a $41 billion dollar loss. These numbers are starting to get so enormous that most of us common folk simply cannot relate. We think there is a very good chance that banks as we know it will give way to a system of national banks with the taxpayer picking up the tab. As long as banks are shaky it will be very hard if not impossible to jump start our economy. The same is true for the housing market.

Europe is having some severe problems in the banking area. The Bank of England just announced plans to buy toxic assets to the tune of $74 billion. Denmark has announced a bank rescue plan as well. Ireland nationalized the Anglo Irish Bank and is now rumored to be in talks with the IMF (International Monetary Fund). It seems that this may have been too big for the faltering Irish government to handle which will put pressure on the Euro.

Spain is the first nation to lose its AAA status since Japan in 2001. They are the second country this year to be downgraded. Greece was downgraded last week. Ireland and Portugal will most likely suffer downgrades soon. The Ukraine is projected to default on its debt very soon. Only the turning on of natural gas by Russia has been good news this weekend.

In Asia, China announced an increase in unemployment for the first time since 2003. Right now it is 4.2% and is expected to go to 4.6% by the end of the year which would be the highest since 1980. Electricity consumption actually rose and there is some evidence that housing is on the rise. China's biggest problem is they need 8% GDP growth each year just to accommodate graduates and new people entering the workforce. This will not happen this year and 5% growth may be all they can muster which is not good news. Over 100,000 factories have closed in the past year, a truly staggering number.

In one of the most chilling statements of recent weeks, South Korea suggested that this is time to sell U.S. Treasury bonds. Asia is the region most responsible for financing our past spending spree. They do it by not demanding money but by taking treasury bonds as an I.O.U. Now they want to get paid. China and Japan may need to cash in the not too distant future. This would be a disaster for interest rates which would skyrocket.

There are very few economic reports due this week. The only one of significance is the Housing Starts for December. In November they were down 18.9% and will most likely be down this month. We don't see any uptick to speak of until some of the inventory is cleared out. Right now, there are much better deals buying bank-owned foreclosures. Why build and pay full price when you can get a home at 50% to 60% off.

And finally, there is the weekly unemployment numbers. The amount of layoffs is simply mind staggering. Firms are firing the help quickly as demand has rocketed decidedly downward. As we progress through the year we will be seeing more businesses lose staying power and fold up. We think we will have unemployment go from 7.6% to around 10% a number not seen since 1982. This is what needs to be stimulated and Washington knows it. Now we can only hope that things will not be delayed too much as the politicians scramble to cover their "debts and obligations" to the lobbyists and fund raisers who are the first in line for a bail-out!