It’s not every day that the chairman of the Federal Reserve predicts that some banks will actually fail in coming months, but that’s just what Ben Bernanke said yesterday in testimony before a Senate committee. The prospect of bank failures is one measure of how deep the current economic downturn has become. The country has not seen widespread bank failures since the savings and loan crisis of the late 1980s, which precipitated an expensive taxpayer-financed bailout, a major credit crunch and a deep recession in 1990 and 1991. Meanwhile commodity prices continue to soar with oil over $100 per barrel and gold nearing $1,000 per ounze. Yesterday’s poor jobs report was one of the strongest indicators to date that the economy is in a recession. With all of this negative background I am still amazed that the stock market has held up as well as it has. Unfortunately I don’t think the market can hold on much longer and I would not be surprised to see a very strong sell-off in coming days.