Mort­gage appli­ca­tions sky­rocket as ARM resets force homeowner’s hand. Italy is likely the next Euro­pean country to join Greece in finan­cial chaos. Gei­thner assures the world that the U.S. is recov­ering despite market volatility. The market is cor­recting last week’s deeply over­sold con­di­tion, and may carry slightly higher before turning down again.

Every market is pointed down now: stocks, real estate, com­modi­ties, metals, munic­ipal and cor­po­rate bonds. Beware! The defla­tionary bear is on the loose. Will stocks ulti­mately break the 4,000 level or lower? Will 500 more banks be gone by the end of 2010?

Spe­cial interim report: Gold and silver crash along with stocks.

The Baltic Dry Index is down another 4 per­cent in two weeks, off­set­ting any claims by man­u­fac­turing that it is in recovery mode. The Gulf oil spill will cost gulf states hun­dreds of bil­lions to mit­i­gate and some cities may have to be com­pletely relo­cated, cre­ating eco­nomic dead zones. Real estate faces a sudden-death col­lapse that could begin at any time. The Con­gres­sional Budget Office warns Con­gress that it is leading the country toward dis­aster with run­away debt and spending.

Were peaceful G20 pro­testers sand­bagged by agents provo­ca­teur? Many Cana­dians think so. Famed econ­o­mist Paul Krugman pre­dicts America’s third defla­tionary depres­sion, starting now.  Are cen­tral banks pushing the global economy over the cliff? Obama says he intends to reveal “dif­fi­cult choices” to Amer­i­cans next year. Mar­kets and metals may both be set to decline this week.

Greece to sell islands to raise money to help pay off debt? Will U.S. follow suit some day? Finan­cial reform leg­is­la­tion will be as neg­a­tive as Health Care Reform when imple­mented. Stocks expe­ri­enced an outside-down week and are likely headed lower next week.

Real estate sales down again, with condos hit the hardest. Defla­tion is openly dis­cussed by major econ­o­mists. The Baltic Dry Index is declining again, reflecting slower man­u­fac­turing in the near future. Is a Sci­en­tific Dic­ta­tor­ship in the works for the world? Sci­en­tists say they know what you will do before even you know. If Monday’s highs are not exceeded, the larger trend is seen as down.

America will be #2 in man­u­fac­turing next year, losing its 110 year record as the largest man­u­fac­turer in the world. Fannie and Freddie are fore­closing homes at a rate of one every 90 sec­onds, eating the debt, dumping the homes, and refi­nancing the new owners on the same terms as before. Obama’s inept­ness is likened to Jimmy Carter on steroids. Odds are high that stocks com­pleted their minor wave two up and will decline in wave 3. Gold may have had a key down­side reversal today with a $35 drop from peak to the low.

Many states, coun­ties and cities are on the verge of shut­down.  Greenspan calls for a “tec­tonic shift” in U.S. fiscal policy, without which we will see col­lapse and default.  Grave errors in defla­tionary poli­cies of the EU is making it a “dead man walking” according to some ana­lysts. Stocks are close to com­peting minor wave 2, which could happen early next week.

Banks in Ger­many and France have the highest risk expo­sure to Greece, Spain, Por­tugal, Ire­land. EU Pres­i­dent warns that “democ­ra­cies could dis­ap­pear” if sov­er­eign debt crisis isn’t resolved, while Roubini says that the risk of double-dip reces­sion is increasing rapidly. Stocks are mixed and poised for a down­ward reversal.