With winter right around the corner, there is likely to be some concern about heating bills. With that in mind, let's take a look at commodity prices to see what may be in store for the average consumer.

Front Month Heating Oil Monthly Chart

Bloomberg is reporting Single-Family Home Starts in U.S. Fall to 26-Year Low.

Housing starts in the U.S. fell more than forecast in September as construction of single-family homes plunged to the lowest level in 26 years, indicating the three-year real-estate slump is intensifying.

Oil has fallen below $70 in the wake of a slowing global economy and massive deleveraging by hedge funds.

Monthly Crude Chart

The European Union is Pushing to Overhaul the Post-World War II Financial System.

EU leaders called for a global summit as soon as next month to rewrite the 1944 Bretton Woods accord that paved the way for Europe's post-World War II reconstruction and set up the institutions that oversee the world economy today.

The Baltic Dry Shipping Index covers dry bulk shipping rates and some view it as a proxy for general economic health. The index continues to collapse.

Baltic Dry Index

Inquiring minds are looking at the Federal Reserve Bank of New York Empire State Manufacturing Survey.

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated significantly in October. The general business conditions index dropped 17 points to a record-low -24.6. The new orders index also fell to a record low, and the indexes for shipments, unfilled orders, and inventories all declined sharply. The prices paid index eased significantly, to its lowest level of the year, while the prices received index also fell, although less sharply. Employment indexes were negative. Future indexes declined markedly with exceptionally large declines in the future new orders and shipments indexes.

For now, you can force banks to take money, but you can't force them to lend it. Let's explore this theory starting with a look at the Drama Behind a $250 Billion Banking Deal.

The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.

Lost in the euphoria of Monday's rally, LIBOR and the TED Spread still reflect extremely tight bank to bank lending conditions. Let's take a look.

LIBOR

In what may be the most Orwellian comment in history, President Bush just stated: "Bank buyout needed to preserve free market".

The US Government is to spend up to $250 billion buying direct stakes in banks and other financial institutions under a controversial emergency plan which President Bush insisted today was "not intended to take over the free market but to preserve it".

The Wall Street Journal is reporting Paulson to Meet With U.S. Bank Chief.

Treasury Secretary Henry Paulson has called the top U.S. banking heads to a meeting today in Washington, people familiar with the matter said.

Yesterday in Fannie, Freddie Commit to Waste $40 Billion a Month Taxpayer Money I talked about the chain reaction of guarantees.

Ireland guaranteed bank deposits putting Germany and the UK at a disadvantage. After criticizing Ireland, Germany did the same. The UK stepped in to guarantee bonds so now Germany and the US are at a competitive disadvantage.

Bloomberg is reporting G-7 Commit to `All Necessary Steps' to Stem Crisis.

Group of Seven finance chiefs, meeting after global stocks plunged the most since 1970, pledged to prevent the failure of key banks while stopping short of fresh initiatives to thaw credit markets.

In Elliott Wave terms the S&P 500 is in wave 3 of 3 down. I will attempt to explain this in terms those not familiar with Elliott Wave can understand. Here goes:

Wave 3's are long and strong and unrelenting. They can be in either direction. When wave 3 is headed up, everyone is waiting for a pullback to get in. That pullback never occurs.

The Fed and Treasury are perplexed. Liquidity schemes like the TAF, PDCF, TSLF, TARP, ABCPMMMFLF, and the CFFF did not help stimulate bank.

Liquidity measures cannot solve the crisis or stimulate lending for reasons I've stated in Pushing on a String In Academic Wonderland and Thoughts On The Commercial Paper Funding Facility.

Bloomberg is reporting Trichet Can't Rule Out More Cuts, Offers Cash Flood.

European Central Bank President Jean-Claude Trichet said he can't rule out further interest-rate cuts after joining a round of global reductions today and offering to flood the banking system with as much cash as it needs.

This morning the Fed, ECB, Bank of England, Bank of Canada, and Sweden's Riksbank all cut rates by 50 basis points. Japan is on the sidelines cheering.

US Futures that were down as much 4% are now in the green. Short term perhaps the market was due for a bounce, perhaps not as the day is young, but longer term one cannot cure a solvency issue with rate cuts.

Gold in "Real" terms is soaring. "Real" in this case means how much an ounce of gold will buy. Let's compare gold to a commodities, to silver and to the stock market, starting with a basket of commodities as measured by $CRB commodities index. Charts are as of 2008-10-06.

Click on any chart in this set to see a sharper image.

Main Street and Wall Street both better be bracing for layoff because they are coming. (I talked about that a bit in Jobs Contract 9th Consecutive Month.)

Mass Layoffs Rise

Bloomberg is reporting European Crisis Deepens; Officials Vow to Save Banks.

The global credit crunch deepened in Europe as government leaders pledged to bail out troubled banks and protect depositors.

Congress passed a $700 billion bailout package today. It was a total and complete waste of $700 billion. It further depletes the pool of real funding.

Yes, the Fed has started a monetary printing campaign. Yes, the SEC will suspend mark to market accounting. So what happens now?