If you thought last week was a tough one for the U.S. economy, this week is likely to be far worse.

Over the weekend, Bear Stearns, one of Wall Street’s most successful investment banks, became one of the biggest victims of what began as a subprime mortgage crisis: It had to be rescued by the Federal government and JPMorgan Chase.

By doing so, the Fed crossed a line that now leaves American taxpayers vulnerable in a way not previously the case with investment banking.

More to come?

That’s the big fear now–that others will follow Bear Stearns.

In large measure, that is why the U.S. Federal Reserve cut the discount rate it charges on direct loans to banks over this weekend.

Dollar sinks yet lower

The U.S. dollar keeps going down…setting record after record. It is, yet again, at a new record low against the euro.

This is not about to get better anytime soon.

Brace yourselves. We’re in for a very bumpy ride.