Eeyore's News and View Special Report

Man what a week, dow and the other indexs are way down, gold and other percious metals way up, gas going up and down. Fear is controling people now. As i said people have no confidence anymore, and the "so called" canidates are not helping. What a shame. Bad time for me to going on vacation, but i have to check on stuff and need a break. Anyway just trying to keep you all up to date. I guess there are a few that are reading the blog, it is over four hundred on the counter and only just at 100 posts. Lets jump right in:


Fed orders emergency rate cut, other banks follow October 8, 2008 - 7:40am
By JEANNINE AVERSA AP Economics Writer
WASHINGTON (AP) - The Federal Reserve, acting in coordination with other global central banking authorities, cut a key U.S. interest rate by half a percentage point Wednesday to steady a teetering economy.
The Fed reduced its key rate from 2 percent to 1.5 percent.
In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent, while the European Central Bank sliced its rate to 3.75 percent.
Other central banks also taking part include the banks of Canada, Sweden, and Switzerland.
China also cut its key interest rates Wednesday for a second time in less than one month to stimulate slowing economic growth amid the global credit crisis.
Fed Chairman Ben Bernanke and his colleagues ratcheted down their key rate by 0.5 percentage point to 1.5 percent. The action revives the central bank's rate-cutting campaign which had been halted in June out of concerns that those low rates would worsen inflation. Since then, however, economic and financial conditions have dangerously deteriorated, forcing the Fed to reverse course.
The fact that the Fed felt it couldn't wait until its regularly scheduled meeting on Oct. 28-29, underscored the urgency of the situation.
The Fed took the action in a coordinated move with other central banks, which also were cutting their rates.
"The pace of economic activity has slowed markedly in recent months," the Fed said "Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."
Although inflation has been high, the Fed believes that the recent drop in energy prices and the weaker prospects for economic activity have reduced this threat to the economy.
The Wednesday cuts come as markets in Asia and Europe sink amid waning confidence, Britain steps in to support banks, and Russia closes its main stock market for two days.
In addition, the Fed reduced its emergency lending rate to banks by half a percentage point to 1.75 percent. Given the intense credit crisis, banks have been ramping up their borrowing from the Fed's emergency "discount" window.
In response, the prime lending rate for millions of borrowers will drop by a corresponding amount. The prime rate applies to certain credit cards, home equity lines of credit and other loans.
The hope was to spur nervous consumers and businesses to spend more freely again. They clamped down as housing, credit and financial problems intensified last month, throwing Wall Street into chaos. Many believe the country is on the brink of, or already in, its first recession since 2001.
The Fed's last rate cut was in late April, capping one of the most aggressive rate-cutting campaigns in decades as it scrambled to shore up the faltering economy. After that, the Fed moved to the sidelines, holding rates steady as zooming food and energy prices during that period threatened to ignite inflation. In the past few months, energy prices have retreated from record highs reached in mid-July, giving the Fed more leeway to drop rates again.
At its last meeting in September, the Fed struck a more dire tone about the economy, hinting that a rate reduction once again could be in the offing.
Even with the unprecedented $700 billion financial bailout quickly signed into law by President Bush on Friday, the failing economy and the jobs market probably will get worse. Many believe the economy will jolt into reverse later this year _ if it hasn't already_ and will stay sickly well into next year.
One of the most crucial pillars of the economy _ the jobs market _ has cracked, and wage growth is slowing. This means that consumers will be even more hard-pressed to spend in the fashion that helps grow the economy.
Increasingly skittish employers slashed payrolls by 159,000 in September, the most in more than five years. A staggering 760,000 jobs have disappeared so far this year. The unemployment rate is 6.1 percent, up sharply from 4.7 percent a year ago.
The unemployment rate could hit 7 or 7.5 percent by late 2009. If that happens, it would mark the highest rate of joblessness since the months immediately following the 1990-91 recession. Some economists say the jobless rate could rise even more before the situation starts to get better.
Mounting job losses, shrinking paychecks, shriveling nest eggs and rising foreclosures all have weighed heavily on American voters. The economy is their No. 1 concern, polls have shown.
Spooked consumers and businesses have pulled back so much that some analysts fear the economy stalled _ or even worse, shrank _ in the July-to-September quarter. Many predict the economy will contract in both the final quarter of this year and the first quarter of next year, meeting the classic definition of a recession.
The financial crisis that intensified in September is forcing a seismic shake-up on Wall Street.
Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection. A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America. American International International Group was thrown a financial lifeline. And, the last two investment houses _ Goldman Sachs and Morgan Stanley _ decided to convert themselves into commercial banks to better weather the financial storm. The number of banks that have failed this year are up sharply from last year. On Friday, Wachovia Corp. said it will be acquired by Wells Fargo & Co. wiping out Wachovia's previous plan to sell its banking operations to rival suitor Citigroup Inc.
http://wtop.com/?nid=111&sid=608351

Japan's Nikkei plunges 9.4 percent on crisis fears October 8, 2008 - 5:01am
A passerby looks at the electronic stock board in front of a Tokyo brokerage Wednesday, Oct. 8, 2008 as Japan's stock market plummeted 9.4 percent _ its biggest one-day drop in 21 years. The benchmark Nikkei 225 index nose-dived 952.58 points to 9,203.32, a five-year low. (AP Photo/Katsumi Kasahara)
By SHINO YUASA Associated Press Writer
TOKYO (AP) - Japan's stock market plummeted 9.4 percent _ its biggest one-day drop in 21 years _ Wednesday as investors rushed for the exits on deepening fears over the global financial crisis.
The benchmark Nikkei 225 index nose-dived 952.58 points to 9,203.32, a five-year low. That was its third-biggest drop in percentage terms and the largest plunge since October 1987.
Toyota's shares fell nearly 12 percent on concerns about its earnings amid a slump in the vital U.S. car market.
The massive sell-off in Tokyo follows a sharp retreat on Wall Street Tuesday, when the Dow Jones industrial average lost more than 5 percent despite steps by the Federal Reserve to reinvigorate dormant credit markets.
"Selling on Wall Street triggered further selling in Tokyo. It's like a chain reaction," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. Ltd.
"No one knows the bottom of the ongoing financial crisis, and investors were really spooked by growing uncertainty over the global credit crisis," he said.
Selling accelerated as investors were pessimistic that the finance ministers and central bankers from the Group of Seven industrialized nations would announce any effective measures at their meeting in Washington on Friday to tackle the global financial crisis, Takahashi said.
"Investors were taking a wait-and-see approach over the upcoming meeting, but today's massive selling indicated that they were not so hopeful for concrete action by the G7," he said.
The Nikkei index has lost a staggering 24 percent in the last two weeks.
Around Tokyo, individual investors were stunned by the day's events.
Tomohisa Kubota, a 51-year-old businessman from Kobe in western Japan, described the stock market as "rolling down the hill."
"I've been carefully monitoring the price movements, because that affects my finances," said Kubota, who owns retail and manufacturer stocks. "But I didn't expect the Nikkei to fall this much."
Among the day's biggest losers, Toyota Motor Corp. plunged almost 12 percent to 3,280 yen on media reports that Japan's top automaker's operating profit would fall 40 percent this fiscal year through March due to sluggish demand in the U.S. market.
Toyota Senior Managing Director Yoichiro Ichimaru said his company was sticking with its financial targets for now, including this year's global vehicle sales goals. He acknowledged, however, that the numbers were becoming increasingly tough to meet because of a drop in U.S. sales.
Toyota's rival, Nissan Motor Co., also dropped 9.9 percent, to 501 yen. Honda Motor Co. lost 10.31 percent to 2,305 yen.
The dollar briefly fell below the 100-yen level for the first time in six months as jittery investors dumped the greenback.
"Institutional investors are selling the dollar. Investors are simply spooked by a meltdown on Wall Street and its severe impact on the global market," said Mitsuru Sahara, vice president of foreign exchange division at Bank of Tokyo-Mitsubishi UFJ Ltd.
The dollar fell as low as 98.58 and was trading at 100.21 yen in Tokyo late afternoon trade, down from 101.38 yen in New York late Tuesday.
Among other stocks, Sony Corp. plunged 12.3 percent to 2,385. Toshiba Corp. also fell 7.2 percent to 359 yen.
Mizuho Financial Group shed 7.7 percent to 361,000 yen.
The broader Topix index dropped 8.04 percent to 899.01.
__
Associated Press writers Mari Yamaguchi and Yuri Kageyama contributed to this report.
http://www.wtopnews.com/?nid=111&sid=1493223

Russia and Brazil crumble as commodity prices crash
By Ambrose Evans-PritchardLast Updated: 1:51PM BST 07 Oct 2008
The entire complex of commodities and emerging market stocks, bonds, and currencies is now in free-fall as the economic crisis spreads like brushfire, threatening to draw every corner of the globe into the vortex of recession.
Oil, grains, and industrial metals all crumbled as the week began despite the passage of the Paulson bail-out plan in Washington and dramatic moves by European governments to shore up their banking systems, compounding the steepest commodity crash in over half a century.
The big exception yesterday was gold, which surged $34 to $864 an ounce on safe-haven buying as the markets came face to face with the unsettling reality that the euro is no healthier than the dollar, and perhaps sicker.
The euro’s dramatic slide over the past two weeks has for the first time exposed the instability of the twin-pillar system holding up global finance.
Hans Redeker, currency chief at BNP Paribas, said investors fear that no one is in charge of Europe’s monetary union. “Who is Mr Europe? What is his telephone number? There is no such thing. We have a cancer eating at the system because even healthy companies cannot roll over their debts, yet the politicians still don’t understand the risk,” he said.
The sudden shift in commodity sentiment has led to a massive withdrawal of funds from frontier markets, triggering stock market routs across Latin America, Asia, and Eastern Europe. The MSCI index of emerging markets fell 11pc yesterday in its worst day ever.
Russia suspended trading after Moscow’s Micex index crashed 19pc in its biggest one-day drop since the 1998 default. The state-controlled VTB bank fell 25pc.
“Traders are just sitting there staring at the screens and going, 'Wow’,” said Ron Smith, a strategist at Alfa Bank.
Brazil shut the Sao Paulo exchange after the Bovespa index crashed 15pc in panic trading, led by flight from the resource giants Vale and Petroleo Brasileiro. Mexico’s Bolsa was off 7pc; India’s Sensex was off 6pc.
The Goldman Sachs Commodity Index has tumbled a third since May. Chartists say it is now perched precariously on its seven-year line, threatening to challenge the “supercycle” thesis that became so fashionable at the top of the bubble.
“The boom was fuelled by massive speculation,” said Charles Dumas, chief strategist at Lombard Street Research.
“Commodity derivatives in the spring had a face of $10 trillion, so it doesn’t take many bulls to sell and send prices crashing. Remember all those clever bankers saying this was the new investment medium, 'uncorrelated’ with either assets? Well, it’s correlated now – downwards,” he said.
The Australian dollar, the beacon of commodity sentiment, went into near-meltdown yesterday, dropping 9.7pc against the yen in the largest one-day drop on record as Japanese investors dumped their Uridashi bonds and scrambled to close bets on high-yield economies – known as the carry trade.
Brent crude oil fell to $85 a barrel, down over 40pc since the July spike. It is a casualty of the synchronised recession engulfing the entire G7 bloc of leading powers.
Japan and the eurozone are already contracting: the Anglo-Saxon economies are close behind. The new twist is an abrupt downturn in China, until now the dominant force in the oil and metals boom.
Albert Edwards, global strategist at Société Generale, said China depends on exports to US and Europe for its lifeblood, and could face banking problems of its own.
“I think China is going into recession as well. This is going to catch investors off-guard.”
Stephen Jen, currency chief at Morgan Stanley, said the “glowing reputation” enjoyed by emerging markets during the global boom was a deception caused by the easy-money largesse of the credit bubble. Strip that away, and the picture looks very different.
“They are very vulnerable to a U-turn in capital flows,” he said.
The oil slide has reached the point where it is setting off a powerful chain reaction through the nexus of global markets. It may soon be unprofitable to divert much of the US crop harvest to biofuels, so futures contracts are rapidly scaling back assumptions. Corn fell 6.4pc yesterday, while soya beans were off 5.4pc.
There are fears that Russia could slip into a downward spiral if oil drops to $50 a barrel, which is now the lower end of Merrill Lynch’s forecast.
Moscow has become addicted to the oil bonanza, ratcheting up spending so quickly that it may now need prices to stay above $90 to fund spending plans. Veteran analysts say they have seen this movie before.
http://www.telegraph.co.uk/finance/markets/3148364/Russia-and-Brazil-crumble-as-commodity-prices-crash.html

European Government's Panic Triggers Stock Market Crash
Black Monday ended with European stock markets down by between 7% and 9%, wiping out more than $2 trillion from global market capitalisation as markets collapsed in response to the disunified panic moves by individual european governments to guarantee all deposits at 100% which is contrary to the outcome of the weekend crisis meeting of European leaders that's only significant result was for a £12billion package of loans for small businesses.
Ireland started the ball rolling last week with its 100% guarantee to prevent a collapse of its financial system. This prompted the weekend European ministers meeting which failed to deliver on expectations which prompted unilateral actions by individual governments. The scene was set by news of Germanies apparent $2 trillion, 100% guarantee to all depositors which came in the wake of the collapse of attempts to rescue Germanies second largest commercial lender Hypo Real Estate. Germanies move was closely followed by Spain, Denmark and Greece (earlier), with suggestions a French guarantee was also imminent.
Iceland the Northern Rock Country
We had the first signs during the morning of the first european country fast on the road to bankruptcy, Iceland which is outside of the Euro currency block experienced a collapse in its currency the Icelandic Krona following its governments panic moves to prevent a collapse of its big banks as the following article suggested could lead to a bankruptcy of the country- Iceland Going Bankrupt?
The latest news on the Iceland front is that the Government is seeking to take immediate control of all of the Icelandic banks which includes nationalisation of Landsbanki and Glitner and force the other banks to take state loans. UK customers of the Icelandic subsidiary bank, Icesave found that they were unable to withdraw funds during the day which I warned as strong possibility in my earlier article. However the funds are protected both by Iceland's own guarantees and the UK FSCS picking up the balance, therefore any account freezures 'should' be temporary, and neither will savers be hit by the collapse of the Krona as savings tend to be in sterling or euro's. However savers should at the first opportunity seek to repatriate their savings to a 100% UK bank as the consequences of a country going bankrupt could render guarantees meaningless.
Euro Collapsing?
The Euro suffered a sharp fall which is not unexpected given the disunity exhibited by individual member countries, which has prompted many credible commentators such as Wolfgang Munchau of the Financial Times to suggest that this could result in a collapse of the Euro as the following article illustrates Credit Crisis Actions Risk Collapse of European Monetary Union.
For Europe, this is more than just a banking crisis. Unlike in the US, it could develop into a monetary regime crisis. A systemic banking crisis is one of those few conceivable shocks with the potential to destroy Europe's monetary union. The enthusiasm for creating a single currency was unfortunately never matched by an equal enthusiasm to provide the correspondingly effective institutions to handle financial crises. Most of the time, it does not matter. But it matters now. For that reason alone, the case for a European rescue plan is overwhelming.
However I do not agree with this and similar conclusions elsewhere, my view remains that the EURO is a currency that looks set to one day become the worlds number one reserve currency in the coming decades, especially as Europe seeks to further expands its frontiers. Clearly that point is still some distance away given the flight of frightened capital to the US Dollar and Japanese Yen. The European finance ministers clearly have to get their act together in the short-term and speak with a single voice, it remains to be seen whether they are able to do this or not. However panics tend to garner reforms which break through political resistance against more centralised control of the Euro block banking system, therefore there are many actions that can be taken to further pool individual countries sovereignty to strengthen the EURO and therefore will prove strongly supportive of the Euro in the long-run as control is further taken out of the hands of individual countries that results in confusion and panic as we have witnessed today.
Stock Markets Crashing
Asian markets started the ball rolling following Fridays about face by the US Stock markets following the passage of the bill in the House of Representatives, with the Nikkei down more than 4%, India down 4% and Hong Kong and Shanghai also down 5% each, which set the scene for similar falls amongst European stock exchanges during the day.
By Europe's close, the London FTSE 100 Index had its worst points drop on record of 391 points, ending the day down 9% which is its worst performance since the October 1987 crash., during my weekend article / newsletter I warned that the current situation was worse than either of those that I have traded through namely 1987 and the dot com crash / bear market of 2000, where investors will be subjected to many crashette's along the way rather than a big one day crash, as western governments seem to have measures in place to prevent an out and out single one day crash along the lines of the 1987 22% drop on the Dow Jones. London's 9% was joined by Frances CAC 40 which also ended down 9% which is its worst on record, and the German Dax was off 7%.
The United States witnessed a 800 point crash on the Dow Jones which followed an opening free fall before the "specialists" stepped in as part of their duties under the direction of the Plunge Protection team (PPT) to support the market when it is in a full crash mode, this enabled a trend to form during the day which contributed to a late day change of short-term trend and sentiment which saw a sharp reversal and the Dow Jones to end the day down 370 from an earlier low of 9,500. Other indices such as the Nasdaq followed a similar intra-day pattern.
Russia faired far worse, which took a real battering by plunging 19%, its worst ever one day drop which prompted a halt in trading during the market freefall. Clearly the Russian's have yet to develop their own circuit breaks and PPT.
Are Bailouts the Answer ?
NO, Bailouts are not the answer as we have witnessed following the US $700 billion blank check which was supposed to be bullish for the stock market has clearly had ZERO positive impact on the stock market, what the markets demand is liquidity and capital injections for the banking sectors. Therefore we may witness over the coming days the mother of all liquidity injections, and perhaps capital stakes in banks or part nationalisations along the lines of what Iceland is proposing, that coupled with deep interest rate cuts would influence market sentiment.
Stock Market Where Next ?
The stock markets are exhibiting extreme short-term volatility which means it is basically a Reactive traders market than a forward looking forecasters market, nevertheless the market is oversold on many measures, especially the VIX volatility indicator which exploded to a new all time high of above 50, this shows EXTREME FEAR as market participants scrambled to hedge against further declines and possibly a crash by buying mainly PUT options. This extreme level is usually associated with imminent significant stock market bottoms. However the VIX has been elevated at a level of above 40 for several weeks which illustrates that we are living through historic events the likes of which have not been seen since the 1987 crash.
Therefore whilst the stocks bear market is a long way from a bottom as corporate earnings continue to contract in the face of economic recession, the current stock market panic bottom may be imminent in terms of TIME, which on a seasonal basis implies a rally into the November US presidential election, though barring any further screw-ups in disunity amongst European governments.
The expectations are for a bounce on European exchanges on Tuesday of approx 50% of Monday crash declines, therefore expect strong rallies during the day from the opening onwards which follows on from Monday's late session Dow Jones bounce.
What can Savers and Investors do ?
Savers - To reiterate what I have been saying over the last 6 months, savers still have a a golden opportunity to lock in high fixed savings rates which in the UK are above 7% . These rates won't stay around for much longer, were talking perhaps in the days rather than weeks or months. So the time for action is now ! - Yes, banks can go bankrupt but savings are protected which includes accumulated interest. In the UK the protection is for the first £50k per group. I will be bringing forward my interest rate forecast for 2009 to tomorrow in light of the fast changing pace of events.
Stock Market Investors - Financial panics tend to present opportunities, but for the ordinary small investor this is not the time to contemplate stock market exposure as the likely hood is that as with many of the banks going bankrupt or being taken over for mere peanuts, so will many companies during the recession, this means attempting to pick stocks now to ride out the recession is very difficult and could result in the destruction of much shareholder capital even if the indices do not reflect this on the other side of the crisis. Therefore stock market investors should avoid equities as corporate earnings are expected to contract and therefore elevate price / earnings ratios which makes today's valuations for many companies meaningless.
Gold - My analysis of 2 weeks ago conclusion was that gold looks set to exhibit a bullish trend into early 2009 to above $1200, the trend to date is inline with the forecast which called for a downtrend into early October before the next up leg began, which appears to have now started following yesterdays sharp rally, however the reaction below $850 was a sign of weakness, therefore any reaction during the coming days from Tuesdays peak needs to be muted so as to set the scene for a continuation of up trend.
More recent analysis of the credit crisis.
05 Oct 2008 - Keyser Soze Heists Main Street Out of $700 Billion
02 Oct 2008 - Countries Can go Bankrupt Too!
29 Sep 2008 - Dow Jones Stock Market 777 Point 7% Crash
27 Sep 2008 - Bradford & Bingley Nationalised Another UK Bank Wiped Out by Tulip Backed Securities
25 Sep 2008 - Bailout Plan Talks Collapse Overnight as Congress Rebels
23 Sep 2008 - Gold Bull Market Trend Forecast
21 Sep 2008 - Historic Week: US Government Avoids Financial Armageddon
17 Sep 2008 - Hedge Funds Crash Halifax, HBOS Rescued by Lloyds TSB
14 Sep 2008 - No Bailout for Lehman as Fed Awakens to Bond Market Crash Risk
09 Sep 2008 - BANKRUPT Banks Wiped Out by Tulip Backed Securities, Is China Cheap?
06 Sep 2008 - Credit Crisis Phase II - The Economic Crunch
Your analyst expecting a Tuesday bounce.
By Nadeem Walayathttp://www.marketoracle.co.uk
http://www.marketoracle.co.uk/Article6662.html

Pakistan facing bankruptcy
Pakistan's foreign exchange reserves are so low that the country can only afford one month of imports and faces possible bankruptcy.
Officially, the central bank holds $8.14 billion (£4.65 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $3 billion - enough to buy about 30 days of imports like oil and food.
Nine months ago, Pakistan had $16 bn in the coffers.
The government is engulfed by crises left behind by Pervez Musharraf, the military ruler who resigned the presidency in August. High oil prices have combined with endemic corruption and mismanagement to inflict huge damage on the economy.
Given the country's standing as a frontline state in the US-led "war on terrorism", the economic crisis has profound consequences. Pakistan already faces worsening security as the army clashes with militants in the lawless Tribal Areas on the north-west frontier with Afghanistan.
The economic crisis has already placed the future of the new government in doubt after the transition to a civilian rule. President Asif Ali Zardari has faced numerous but unproven allegations of corruption dating from the two governments led by his wife, Benazir Bhutto, who was assassinated last December.
The Wall Street Journal said that Pakistan's economic travails were "at least in part, a crisis of confidence in him".
While Mr Musharraf's prime minister, Shaukat Aziz, frequently likened Pakistan to a "Tiger economy", the former government left an economy on the brink of ruin without any durable base.
The Pakistan rupee has lost more than 21 per cent of its value so far this year and inflation now runs at 25 per cent. The rise in world prices has driven up Pakistan's food and oil bill by a third since 2007.
Efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have not yet yielded results, while the government has also failed to raise loans on favourable terms from "friendly countries".
Mr Zardari told the Wall Street Journal that Pakistan needed a bail out worth $100 billion from the international community.
"If I can't pay my own oil bill, how am I going to increase my police?" he asked. "The oil companies are asking me to pay $135 [per barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful."
The ratings agency Standard and Poor's has given Pakistan's sovereign debt a grade of CCC +, which stands only a few notches above the default level.
The agency gave warning that Pakistan may be unable to cover about $3 billion in upcoming debt payments.
Mr Zardari is expected to ask the international community for a rescue package at a meeting in Abu Dhabi next month.
This gathering will determine whether the West is willing to bail out Pakistan.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3147266/Pakistan-facing-bankruptcy.html

Bailout: Congress Does Something But Not the Right Thing
The Do-Something Congress - It has not been a good week for the Republic. It took quite a bit of trampling of the Constitution, but the bailout bill passed, as I suspected it would.
The bailout failed the first time it was brought to the House. Undaunted, the Senate pressed on by attaching the bailout as an amendment to another House passed bill that was pending in the Senate. The new bailout version had new taxes, so according to the Constitution it should not have originated in the Senate.
The rallying cry heard all over the Hill the past two weeks was that Congress must act. Our economy is facing a meltdown. Would this bill fix it? Nobody could really explain how it would. In fact, few demonstrated any real understanding of credit markets, of derivatives, of credit default swaps or mortgage-backed securities. If they did, they would have known better than to vote for this bill. All they knew was that this administration was saying some frightening things, and asking for a lot of money. And when has Congress ever been able to come up with a better solution to a problem than to throw more of your money at it? So that is what Congress did, enacting a financial PATRIOT Act in the process.
In its embarrassment at being called a "Do-Nothing Congress" the 110th Congress took decisive action and did SOMETHING. No matter that it was the wrong thing. In fact, it wasn't until the Senate had a chance to load it up with even MORE spending, when it was finally inflationary and horrible enough, at $850 billion instead of a mere $700 billion, that it passed - and with a comfortable margin, in spite of constituent calls still coming in overwhelmingly against it. 57 members switched their vote!
The market went down anyway. Our nation is now just that much more in the hole. You will pay your part of this mess through inflation, and very likely hyperinflation.
Sometimes doing nothing is much better than thrashing about aimlessly. When one is caught in quicksand, for example, or when one doesn't understand economics and finds oneself in the position Congress was in for the past two weeks, with decades of irresponsible monetary policy coming to a head. Why should we trust the same people who said just a few months ago that the economy was perfectly sound? The same people who just knew there were weapons of mass destruction? The same people that crammed the PATRIOT Act down our throats? Why not consult the people who had the foresight and understanding to see this coming?
They would have recommended such logical actions as repealing the Community Reinvestment Act, which forces banks to make bad loans, or allowing the market to set interest rates instead of the Federal Reserve system. How about abolishing the Federal Reserve altogether? There are many things that could have been done, but don't expect Congress take a course of action that comes from a place of understanding and competence when they could just spend money.
This bailout will be the legacy of the 110th "Do-Something" Congress, along with record low approval ratings. Here's hoping the 111th Congress will be a "Do the Right Thing" Congress, and will focus on repealing and abolishing what is wrong with government instead of reinforcing it.
Dr. Ron Paul Project Freedom
http://www.marketoracle.co.uk/Article6658.html

2 French banks to merge
PARIS - TWO of France's largest high street banks were expected on Wednesday to merge to form a single savings giant in a pre-emptive move to protect themselves from the global financial storm.
Banque Populaire and Caisse d'Epargne are mutual banks, partly owned by their depositors, and already jointly control the investment bank Natixis, whose shares have been ravaged during the credit crunch.
The banks have been discussing a possible merger for two years, but have been forced into action by the global financial meltdown, which experts believe will lead to a major shake-up in the European banking sector.
Their plans were therefore given a push when their French rival BNP Paribas swooped to take control of the ailing finance group Fortis's operations in Belgium and Luxembourg, strengthening its position at home.
The governing bodies of the two banks are to meet separately Wednesday and, once they get the go ahead from the governor of the Bank of France Christian Noyer, announce their merger later in the day, company officials said.
Sources from both banks said their central organisations would merge, while maintaining separately branded retail banking networks around France.
The Caisse d'Epargne is a popular fixture on the French high street, with 27 million private account holders, mostly small-scale depositors seeking a safe place for family savings and retirement nest eggs.
Last week, when the shockwaves of the Wall Street financial implosion began battering Europe, a report in the satirical weekly Le Canard Enchaine raised alarm over an alleged black hole in the bank's accounts.
Caisse d'Epargne's management hit back forcefully, denying that there was any problem and insisting that in reality the crisis had encouraged thousands more savers to switch to its accounts from riskier investments elsewhere.
Group chairman Nicolas Merindol said the bank's ratio of debt to deposits is one of the safest in Europe and boasted that since the start of the year it had opened 760,000 new savings accounts holding six billion euros (S$11.9 billion).
The banks are not listed on the Paris stock exchange, but their Natixis subsidiary has seen its price collapse by 70 per cent this year, triggering an investigation into alleged illegal selling of its shares.
On Wednesday, the banks announced that they had increased their respective stakes in Natixis from 34.5 per cent to 35.25 per cent each.
The Banque Populaire has 8.2 million clients in France. The merged group would be one of the three biggest in France, along with Credit Agricole/LCL and BNP Paribas. -- AFP
http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_287379.html

World of pain: Japan index nosedives 9.4%; fear spreads
By Paul Wiseman, USA TODAY
HONG KONG — Japan's stock market plummeted 9.4% — its biggest one-day drop in 21 years — Wednesday as investors rushed for the exits on deepening fears over the global financial crisis.
Panicked investors dumped stocks across Asia again Wednesday, knocking Tokyo's benchmark Nikkei index down 9.4% to its lowest close in more than five years.
Hong Kong's Hang Seng index dropped 8.2% to 15,431.73. Shares fell 5.8% in South Korea, 6% in Thailand, more than 10% in Indonesia, 6.6% in Singapore.
Nothing policymakers have come up with — not even the $700 billion U.S. bailout of Wall Street — has been able to calm markets terrified about a financial contagion that began in the U.S. housing market.
"In a moment of panic, investors need to see something powerful and easy to understand," said Tim Condon, chief Asian economist for ING bank in Singapore. Condon and other analysts would like to see a coordinated effort by U.S. and European central banks to pump massive amounts of capital into a fragile banking system. Even frightened investors would "think twice before swimming against a tsunami of central bank liquidity," Condon said.
So far, said equity strategist Christopher Wood of CLSA Asia-Pacific Markets, government efforts have been "ad hoc." In Hong Kong Wednesday, for instance, the Monetary Authority cut its benchmark interest rate by a full percentage point to 2.5% to thaw out frozen credit markets. And Britain announced that it would partially nationalize major banks.
Stewart Ferns, equity strategist for Macquarie Securities in Hong Kong, said stocks are being pushed down by investors scrambling to raise cash to repay cheap loans they'd used to finance risky investments.
Enticed by unusually strong global economic growth the past several years, many investors would engage in "carry trades," taking out loans in countries with rock-bottom interest rates (often Japan) to invest in markets elsewhere that offered higher potential returns, Ferns said. Now that those riskier investments are going sour, investors hustling raise cash to repay the loans, often denominated in Japanese yen. The process is driving down stocks and strengthening the yen — so much so that the U.S. dollar temporarily slipped below 100 yen Wednesday.
A stronger yen hammers Japanese exporters such as Toyota, which saw its shares fall 12% Wednesday, by making their products more expensive and by shrinking their overseas profits when they are brought back to Japan. Japanese media reported that Toyota would slash its earnings forecasts in the face of weakening worldwide sales.
CLSA's Wood expects to see a unified effort in the U.S. and Europe to pump taxpayer money into weak banks the way Britain did Wednesday, giving governments an equity stake. "I don't think you'll get a sustained rally until there's a coordinated response," he said.
http://www.usatoday.com/money/markets/2008-10-07-foreign-markets_N.htm