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8:00 AM EST, Monday, January 26, 2009: Our banks and our financial system are more busted than you can ever imagine, in spite of the bailout. The depth of bustedness is only now becoming evident. To wit:

1. Rising unemployment will mean huge consumer loan losses -- loans, credit cards, etc. Latest: Caterpillar announced today it's firing 20,000 workers.

2. At least $15 trillion of outstanding credit default swaps that could come due. No one has the capital to pay off these bets.

3. The recession will cause more bankruptcies.

Hence, the banks will do more husbanding of their cash and capital reserves.

All this means that you and I -- in our business and personal lives -- will learn to survive without borrowing. Or, if we do, it will be very expensive borrowing. Figure at least 24%.

Seeking places to put cash safely. Everyone and their uncle has flocked into Treasuries. As a result yields are low and prices are high. If you buy in now, you will lose money when treasuries come down to earth, as they will. (To bet they will come down, my friend Todd is buying ProShares UltraShort 20+ Year Treasury, symbol TBT, as a method of shorting treasurys.)

Better deal for cash are FDIC-insured bank CDs. As I mentioned on Friday, eTrade sells the online, so does Moneyaisle. But frankly, the best deal is to approach your local bank and beg a better rate than what they're advertising. Some of the newer, smaller banks will give you a better deal based on your giving them more money. Some banks are getting creative, figuring ways to get you more FDIC-insurance by opening multiple accounts in permutations of your family's names. Personally I'd be wary of being too creative. If your bank does go bust and does get taken over by the FDIC, you'll end up dealing with petty bureaucrats who will look askance at any way to take advantage of their precious rules. I know this for a fact. I was warned by someone who got stuck in a failed bank and had to deal with the FDIC numskulls.

Service, Service and More Service. The only way to survive this recession is to make yourself and your company indispensable to your customers. Service them to death. To wit: Half the world lives in one year on less than what I'm paying the Ritz Carlton Key Biscayne per night. I asked the hotel's general manager for two favors: a normal banquet chair and securing The Tennis Channel during the U.S. Open. He couldn't or wouldn't do either. I found a banquet chair with less than five minutes of looking. I know that getting the Tennis Channel out of DirecTV takes a three minute phone call. And they turn it on immediately. Do I care? Yes, because at these prices, most everything should be possible. Curiously, his overpriced hotel seems to be booming -- at least for now.

We are directly responsible for this. Swat is a Delaware-size chunk of territory in Pakistan. It has 1.3 million residents. According to a front page piece in yesterday'sNew York Times, It has been effectively taken over by the Taliban. On most nights, a local Taliban leader, Shah Doran, uses a mobile radio transmitter to outline newly proscribed “un-Islamic” activities in Swat, like selling DVDs, watching cable television, singing and dancing, criticizing the Taliban, shaving beards and allowing girls to attend school. The Taliban have already destroyed 169 girls’ schools in Swat. He also reveals names of people the Taliban have recently killed for violating their decrees — and those they plan to kill.

What the Times didn't say: We give gigantic amounts of money to Pakistan. We don't insist they spend any of our money on education. And they don't. In fact, they aggressively neglect it. Saudi Arabia has stepped into the void and set up thousands of schools called madrassas in Pakistan. Many of the Taliban were educated in Saudi-financed madrassas in Pakistan. These madrassas teach Wahhabism, an austere and rigid form of Islam rooted in Saudi Arabia. Saudi wealth and charities contributed to an explosive growth of madrassas during the Afghan jihad against the Soviets. During that war (1979-1989), a new kind of madrassa emerged in the Pakistan-Afghanistan region -- not so much concerned with scholarship as making war on infidels. The enemy then was the Soviet Union, today it's America. We are presently Saudi Arabia's largest customer. The next five, in order, are Japan, South Korea, Singapore, Holland and France.

Australian Open Tennis continues. The huge time difference between us and Australia makes this ideal for TiVo.
M = Men, W = Women, D = Doubles. All times EST. The tennis is unbelievably exciting. Sadly, every one of them is better than I am.

More inauguration humor.
"The total cost of the inauguration was $170 million. They say this is the most of the expensive celebration since that last AIG retreat on our bailout money." --Jay Leno

"During his inaugural address, President Barack Obama said, 'Millions of Americans have lost their homes and some of us who still have homes have their mother-in-laws moving in with them.'" --Jay Leno

"After going to ten inaugural balls last night and dancing more than Cloris Leachman in nine weeks of 'Dancing With the Stars,' the new president was up and in the office at 8:35 in the morning and then he was at church at 9:30. Is it a good sign that after one hour of being president, he decided the best thing he could do for the country is pray?" --Jimmy Kimmel

"I tell you, it's cold all over the East Coast. And did you see those blizzards all over the place? The whole country was so white the Republicans thought they were back in charge again." --Jay Leno

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.