I think that people need to put the credit problems in perspective. I agree with Embry that we are nowhere near through with the turmoil in the credit markets, but that doesn't mean that one shouldn't have exposure to the banks. Quite frankly, Bear Stearns was not that big of a player and the Federal Reserve deemed Bear too big to fail. If Bear was too big to fail, that means that all of the big banks and dealers are too big to fail. Moreover, liquidity can't be an issue anymore, given that the Fed will trade its Treasuries for their crap (or make emergency loans).

With that said, that doesn't mean that the banks' earnings will recover for a long time. Common stock is just a bad idea. As we are finding out, common shareholders get thrown under the bus time and time again (see Lehman and Bear Stearns) to bail out the fixed income investors.

What do you do when:
1. Organizations are on life support by the Federal Reserve
2. The earnings outlook is poor for the next 2 years
3. Common stockholders are a red-headed step-child?

You look into the fixed income. These companies are not borrowing cheap and, if you aren't a long-term follar bear, then you might look at getting some preferred at 8% (I just made that up) or some notes/bonds.

I'm not very positive on the dollar, so fixed income is not attractive to me.