British bankers usually take care of each other...

They don't charge each other much of a premium in interest. For example, in the first half of 2007, the British set the bank-to-bank interest rate at just 0.11 percentage points over the fed-funds rate. It was practically pegged at this level... It hardly fluctuated.

Then August arrived. Fear set in. Things got so bad, bankers wouldn't lend to each other. They didn't trust each other's promises to pay.

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Over the summer, the British Bankers Association – the old banking "gentleman's club" – raised the London Interbank Rate (LIBOR) to nearly a full percentage point above the fed-funds rate. It was a sign of distrust and panic. Banks didn't want to lend to each other. And if they did, they only did so at a high interest rate.

Now the fear has completely subsided.

Recently, the LIBOR rate actually fell below the fed-funds rate (which hasn't happened since 2004).

This is a dramatic signal that bankers trust each other again... that they'll lend money to each other again at favorable rates... and most importantly, that the liquidity crisis is over.

I'm not kidding. Today, even with what felt like panic this week, the LIBOR rate is still below the fed-funds rate.

So the liquidity crisis is over.

Let me be careful with my words here... The subprime mess isn't over. And the housing crisis isn't over. More finance and housing companies with too much debt to survive will go under.

But please understand, the super-dangerous crisis – the liquidity crisis – is over. A liquidity crisis is what we saw in the Great Depression... and it's what Japan saw in the 1990s. When banks won't lend, the wheels of commerce stop.

Now banks are willing to lend again. That's a good sign.

But the question for housing and finance stocks is, has the worst passed? Because if you're a long-time reader of mine, you know that the Secret to 1,000% Gains is to buy when things go from "bad" to "less bad." That's when you make the most money.

We can't know the future. We have many signs that this could be the bottom in housing and finance stocks... But I believe we'll need to see the headlines on housing stocks die down before the big uptrend kicks in.

A Slam Dunk Way to Profit From U.S. Government Policies Banking Crisis Creates 10% Dividend Opportunity

Here's my current thinking: Plan on the housing crisis lingering for years. But also plan on making triple-digit returns from housing stocks before the clouds lift.

If you play it smarter than I did last year, you'll wait until the headlines on housing stocks fade... and you'll wait for the big uptrend to kick in.

The housing and subprime crises will be with us a bit longer... But the worst crisis of all, the bankers' crisis – the "liquidity" crisis – is over. This is the first sign things are going from bad to less bad, so we should see some big opportunities soon...

Good investing,

Steve