One of the biggest casualties of the global financial crisis is the big bust now underway in REITs, or real estate investment trusts. Until mid-2007, U.S. REITs dominated global investment performance in the post-2000 technology stock “bubble” era with eye-popping 25% annualized returns.

Is the bull market over for commodities?

That all depends on how successful global central banks can engineer a new round of inflation as an environment of accelerated deflation or falling prices continues to plague world markets. Make no mistake about it, this is deflation.

Amid a surging dollar since July commodities have tanked more than 25% with crude oil prices about to post their worst weekly performance in four years. Even gold, a sanctuary in uncertain economic times, has faltered this week despite five bank failures across Europe.

Economic paralysis is starting to grip Europe. In the span of just four days, five European banks have either collapsed or have been bailed-out by governments.

On Tuesday, the Irish government, in an unprecedented move, guaranteed all deposits for the country’s five largest banks, possibly stemming a run. Ireland is now viewed as a European safe-haven amid the ongoing financial storm since the government is protecting all deposits, unlike other European deposit schemes.

Yields on Triple-B corporate bonds, or the lowest tier of investment-grade debt, now yield more than 7% as credit spreads versus Treasury debt sit at their widest in more than a decade.

Investment-grade bonds, still stumbling this fall, offer the best values for risk-averse fixed-income investors over the next 12 months as markets eventually stabilize and credit fears subside. Many non-financial issuers don’t need bank credit to fund operations and don’t suffer from a liquidity crunch.

Over the last 12 months bear market rallies have duped global investors. I doubt any rally that follows the passage of the Paulson plan this week will be any different. That’s because credit indicators remain stuck in the mud.

Visions of Britain’s Northern Rock plc trampled Hong Kong on Wednesday as Bank of East Asia’s stock price continued to plunge on fears of a growing liquidity problem. Thousands of panicked-stricken depositors queued at bank branches across the city as customers withdrew funds.

On September 19 a host of countries, including some emerging markets, banned short selling financial stocks and, in some cases, banned short selling altogether.

The United States Securities and Exchange Commission (SEC) banned shorting 799 financial companies until October 2 hoping to stem the market crisis unleashed upon financial stocks. On September 22, the SEC added another 30 names to the list, including General Electric and General Motors -- also threatened by the rising cost of borrowing and declining share prices.

Global markets remain jittery again this morning following another plunge in stock markets on Monday. Despite the euphoria following Secretary Treasury’s bail-out plan last Thursday, markets are worried about the plan’s massive costs, the dollar and whether Congress will balk at passing this important rescue package.