Surprise, surprise; the U.S. dollar is making a comeback…

Since hitting a low earlier in July versus the euro at 1.60, the U.S. dollar has rallied a cumulative 6%. Over the same period, gold prices have also declined, down over 8.5% while commodities have crashed more than 15% off their all-time highs.

One of the most overvalued currencies in my eyes, the British pound, is now getting decked this week, down over 3.5% this month and off 7% from its high versus the dollar last year.

Talk about placing big bets…

According to Thomson Financial and The Wall Street Journal, four Merrill Lynch executives purchased a total of $16.7 million dollars’ worth of company stock on July 29 at $22.50. This morning, Merrill Lynch (NYSE-MER) trades at $27.30. MER’s all-time high was $94.17 in May 2007, or 71% below its current ask price. That’s a crash.

Inflate or die. That’s the Federal Reserve’s mantra since last August when the subprime credit crisis first emerged on its destructive path pummeling global equity and bond markets. Since August 2007, global banks have lost a combined $1.6 trillion dollars’ worth of stock market capitalization – the worst year-over-year loss in history.

Widely regarded as one of the most sensitive interest rate barometers, the Dow Jones Utility Average continues to break down this summer. On Friday, the index hit a fresh 52-week low and now sits 15% below its best level since August 2007.

Amid sharply lower tax revenues, two military campaigns and a struggling economy, the United States Treasury announced it will quadruple its borrowing requirements for the quarter ending September 30.

Longer term, the country’s funding needs will require substantially higher interest rates. The borrowing binge is now heading for the record books and by all accounts is running out of control. The United States must raise about $2.5 billion dollars daily to fund its budget gap.

Earlier this year I recommended several food and beverage companies following declines since the onset of the sub-prime crisis. Six months later, these stocks are all trading lower despite stronger earnings and passing price hikes along their core consumer brand products.

Brick walls are everywhere in 2008…

That’s how to best describe one of the worst calendar years for global investors since 1974. With the MSCI World Index down 14% thus far in 2008, we just overtook 2002 in terms of negative total return. You have to go back to Nixon and Watergate to find an equally poor stock-market performance after barely seven months of trading.

But it’s not just global equities getting slammed in 2008.

Other relatively conservative investments have been crushed.