The credit crisis, which seemed to have been halted by the Fed’s rather spectacular rescue operation of Bear Sterns, is far from over. Many banks, and investment banks need money, but the options are dwindling, and this constitutes a big problem because banks are still central institutions in the functioning of today’s capitalism.

Let’s review a few options:

• Sovereign wealth funds
• Claim emissions
• Raising deposits
• Selling the silverware
• Selling oneself

The first option, the sovereign wealth funds, has probably been exhausted already. We are not aware that any of these sovereign wealth funds that took positions in any of the US (or a few European) banks are enjoying those decisions right now (but perhaps they take a very long-term view, who knows).

They are likely to smart on some very significant losses for a start, but even more serious than that, they will not have the feeling that these financial institutions have levelled with them concerning their degree of exposure to risky assets.

Or it could even be worse, these financial institutions might still not have an adequate idea of their exposure themselves, as markets for quite a few of them have dried up and they’re extremely difficult to price, for starters.

In any case, it doesn’t like they will come back for more anytime soon (unless their government tells them to as might happen in some cases, but then the motives are political, rather than economical).

Claim emissions is another instrument to re capitalize that has especially been used in Europe. Now, Europe’s banking problems, although serious, are not quite of the magnitude of their counterparts in the US.9

These are balance sheet problems which originate from the first phase of the credit crisis, where banks were confronted with rapid declines (and in many cases a drying up of their markets) in products related to American mortgages, forcing them to big writedowns.

Since banks didn’t trust one-another, they could not really borrow from other banks (many of which had the same problems).

In the US, the problem has moved beyond this stage, and the problem has become critical, as bank runs are starting to happen (IndyMac). This is unprecedented, it hasn’t happened since the 1930s. Deposits are insured up to $100.000, anything above it only 50% of it.

That’s not very reassuring at times when cash is king. It could really depend on which bank your cash is at..

Speaking of cash, historically, that’s how banks operated, they took cash from the public, and lended it out. Since houses and stocks turn out to be rather dicey investments right now, cash is king, and European banks are involved in something of a price war, increasing rates on deposits to raise cash.

The good oldfashioned way. In the US, this is rather more difficult, and it’s also expensive, but then again, there are no easy options.

A fourth way of raising capital is selling the silverware, this is already getting close to measures of last resort. Merrill Lynch is selling it’s stake in Bloomberg for instance and they were considering doing the same with their stake in BlackRock (good job they haven’t so far, as they are doing rather well this morning)

In Europe, some of the banks that made big acquisitions just before the credit crisis (like Fortis taking over parts of ABN-Amro) are now the ones most in trouble. It’s CEO already had to step down.

The last way, of course, is to sell yourself. It depends on whether there are any buyers. Bear Sterns needed a helping (coercing?) hand from the Fed. We might see further consolidation in the banking sector, but the question is, are there any banks left that are strong enough to eat up some of their brethren in trouble?

No easy options left, that’s for sure. And for some, there might not be any option left at all..