Is the liquidity crises over?

Not by a long shot! However, there is a faint light at the end of the tunnel.

The banking sector has been under pressure since the middle of last year. However several events over the last few days can be a signal that a catalyst for a bottom. Some several events of note:

1. BofA buying Countrywide.
2. BlackStone buying GSO Capital to invest in commercial loan.
   
3. JP MorganChase buying some of Northern Rock assets.
4. Berkshire signals that they are interested in buying a loan insurer.
5. Fed signal that they are ready for a substantial rate cut.
6. The convergence of the LIBOR rate to the fed rate and return of liquidity to the commercial paper market.
7. Change of leadership in wall street firms.
8. Increase in capital raised for distressed debt funds.
9. $27 billion of new capital invested in Banks: Citi, UBS, Morgan Stanley and other, and it seems that there is more investment to come.
   

The fact that buyers exist for troubled financial entities and assets is a good sign. I am not calling a bottom because I can't; no one can time these things. All I am saying is there is an asset consolidation and deals occurring, which is encouraging.

The implication to me is to increase, although incrementally, some of my bank holdings. I intend to add a bit to BofA and to buy a small position in another bank. I will not go all in right now as there is a possibility that further deterioration can happen, if 4th quarter earnings are worst than expected.