August. It's hot. No one wants to work. In most parts of the world with less A/C, they all close up shop and head to the beach.  This year HSBC, Citi and BofA should have no problem joining them.

If there ever was a case of making lemonade out of lemons, the banks are in the  middle of doing it. Write a bunch of crappy sub-prime loans. Rattle the system into a bubble pop, and accelerate it with the properly-timed bits of write downs and fears of catastrophe.

It drives up CD buying, even though inflation and taxes on the earnings will eat away every penny of interest for 99.95% of the people buying them.  It drives lots of cash into checking and savings accounts held by nervous people who react with panic to what they hear Katie Couric tell them (That Katie is a sharp financial cookie, btw.)  by way of federally insured accounts into banks to make more loans.

If you're a bank, want to be making loans right now. They are your salvation, and a way to grow out of the mess that you just made.

You just scared the bejasus out of the Fed and forced interest rates down to very attractive rates for those trying to refinance their homes.  There will be a tidal wave of people trying to de-ARM themselves with better, cheaper fixed-rates.

The banks will make a butt-load (a new economic term) of money on the re-fis.

Another likely phenomenon of this will be that the banks will end up refinancing a chunk of the crappy sub-prime debt into more manageable instruments in the fixed-rate world, actually taking some of their current write-downs and putting them back on the books as profitable.

So you want to look at banks which both pay a very high dividend that is less likely to be hacked badly, and who have the wherewithal to ride through this.

Of them, I like HSBC (HBC), Bank of America (BAC), Wells Fargo, and, to a lesser extent, Citi (C) 

HSBC with 1.1 Trillion in assets and depth in 83 countries is paying out about 5.86% on its dividend at current pricing.  BAC took its big hit, is eating Countrywide (knowing full well that the hit was coming), and is now positioned to be a much bigger player. Fargo is well run and pays out well. Citi is not well run but they will get there. Their stock is attractive at these prices, though in small doses, buying on any panic selling to make the yield all that plumper when the underlying fundamentals don't support the panic perspective.

Doom and gloomers, note: Nothing... NO THING in the jobs report, or in the huge buybacks that you are facilitating for lucky companies gobbling up their own stock at 20-25% of its real value, indicates that anything other than very slow growth and some regional contraction is happening.

HSBC is also the safest way to play China.  The expansion in China is not lost on HSBC, which has 1/5th of its financial power there. A lot of companies that import and export do business with that bank. Their prosperity ripples through HSBC's bottom line as the best managed bank in that part of Asia.