Given the scenario of an upcoming downturn/recession and the credit markets beginning to function again (suspect referencing inter-bank lending versus residential lending as lenders typically keep there credit standards tight and/or require substantial collateral), housing and commercial real estate values would remain under pressure.

The UK and German markets have started to take steps to restart their respective financial system (Germany's plan would make funds available to US companies with operations incorporated in Germany). While the US may have allocated $700 billion, no loans have been reworked to date, no capital has been infused, financial institutions are opting not to lend, low interest incentives on US auto are gone, and the consumer is looking for ways to spend less, we remain effectively stalled.

Once "a man with the finalized plan" starts the process, we would expect it would take several quarters before financial institutions and the consumer would be willing to step up to the plate.   It does not matter which political party will win the election -- neither will be able to get their respective "stimulus program" in place until next year.

Realistically, the $700 billion (and climbing) "bail-out" may not have a real effect in getting financial institutions to lend before next year. As a result, the markets may retest lows before we can move ahead, as volatility should be expected to remain.

Therefore, given the current price levels and the potential for additional financial institutions to fail or for take-unders to occur (before the bail-out initiatives are activated); our more negative stance on the banking and insurance industries remains.

For our view to have more than a tinge of optimism, more than several of the below events would need to occur:    

• A clear-cut winner in the presidential election (this enhances the uncertainty factor of the markets).    
• A definite plan or time frame to start the "bail-out."    
• If the government only focuses on the asset side of the balance sheet, while the financial institutions will be able to dodge the residential bullet, it does not guarantee they will begin to lend.    
• No plans have been made or attempts made by any of the banks in any real manner to revalue for current conditions or rework residential mortgages.    
• Addressing the equity side would have greater impact on deleveraging the balance sheet.

We perhaps may see a glimmer of a trough in the coming weeks as the UK appears to have been able to create minor oscillations with respect to inter-bank lending in their country.  If the US were to import what the UK has been able to do, then we have a good change to get our system back on to the right track albeit most likely next year.

The only bright spots given the aforementioned would be to focus on the pay-day lenders and pawnbrokers.