Traders work on the floor of the New York Stock Exchange Monday. Fear swept across the financial markets, sending the Dow down as much as 705 points, after the government’s financial bailout package failed to survive a House vote



http://today.msnbc.msn.com/id/3683270/

Stocks tumble as fear grips the markets
Dow plunges over 700 points after House defeats big financial rescue
BREAKING NEWS
MSNBC News Services
updated 3:46 p.m. ET, Mon., Sept. 29, 2008

NEW YORK - Fear swept across the financial markets Monday, sending the Dow Jones industrial average down over 700 points in a volatile market, after the government’s financial bailout package failed to survive a vote in the House.

The Dow was testing a record 721.56-point decline set during the first trading day after the Sept. 11, 2001, terror attacks. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.

“This is panic, and fear is running amok,” one trader told CNBC. “We are in a classic financial meltdown, and it’s panic-based. We’re seeing panic selling.”

As the vote was shown on TV Monday afternoon, stocks plunged and investors fled to the safety of the credit markets, worrying that the financial system would now keep sinking under the weight of failed mortgage debt.

“Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that,” said Chris Johnson president of Johnson Research Group. “This isn’t a market for the timid.”

While investors had some worries that the vote would be close, many on Wall Street appeared to believe it would ultimately pass. The proposal wasn’t been seen on the Street as a panacea for the deepening problems in the financial sector that have led to the failure of Lehman Brothers Holdings Inc. and Washington Mutual Inc. and the forced sale of Merrill Lynch & Co. and Wachovia Corp. — and that still pose a threat to many other banks.

The markets turned highly volatile as it became clear the measure wouldn’t find the necessary support. The Dow tumbled, regained ground and then fell back again, lately trading down 712.69 points, or 6.40 percent, and at the lows of the session.

The broader Standard & Poor’s 500-stock index was lately down 99.37 points, or 8.19 percent, while the Nasdaq composite index fell 178.74 points, or 8.19 percent.

The Federal Reserve declined to comment on the market’s decline.

With Wall Street in turmoil, the yield on the 3-month Treasury bill fell to 0.32 percent from 0.87 percent on Friday. That showed that investors were prepared to get meager returns on an investment as long as it was secure. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.69 percent from 3.84 percent late Thursday.

Investors also faced other worries about the banking system. Wachovia became the latest big bank to be rescued from its overwhelming bad mortgage debt, agreeing to a Federal Deposit Insurance Corp.-brokered buyout of its banking operations by Citigroup Inc.

Marc Pado, U.S. market strategist at Cantor Fitzgerald, said investors are worried about the spread of troubles beyond banks in the U.S. to Europe and other markets.

“Things are dying and breaking apart while they sit there and vote on this thing,” he said.

The dollar fell against other major currencies, while gold prices rose.

Light, sweet crude fell $11.39 to $95.50 on the New York Mercantile Exchange as investors feared that a worsening economy would slice into energy demand. If the decline held, it would be oil’s largest ever one-day drop.

Marc Pado, U.S. market strategist at Cantor Fitzgerald, said investors are worried about the spread of troubles beyond banks in the U.S. to Europe and other markets.

“Things are dying and breaking apart while they sit there and vote on this thing,” he said.

The dollar fell against other major currencies, while gold prices rose.

Light, sweet crude fell $11.39 to $95.50 on the New York Mercantile Exchange as investors feared that a worsening economy would slice into energy demand. If the decline held, it would be oil’s largest ever one-day drop.

Marc Pado, U.S. market strategist at Cantor Fitzgerald, said investors are worried about the spread of troubles beyond banks in the U.S. to Europe and other markets.

“Things are dying and breaking apart while they sit there and vote on this thing,” he said.

Lawmakers voted down a plan that was different than what the Bush administration had originally proposed. There were restrictions allowing Congress to limit how much of the money goes out the door at once. It also included caps on pay packages of top executives as well as assurances that the government also would ultimately be reimbursed by the companies for any losses. The Treasury would have been permitted to spend $250 billion to buy banks’ risky assets, giving them a much-needed necessary cash infusion. There also would be another $100 billion for use at president’s discretion and a final $350 billion if Congress signs off on it.

Wall Street found further reason for worry overseas. Three European governments agreed to inject Fortis NV with a $16.4 billion bailout. Fortis, with has headquarters in Brussels, Belgium and Utrecht, Netherlands, is Belgium’s largest retail bank.

The British government, meanwhile, said it is nationalizing mortgage lender Bradford & Bingley, which has a $91 billion mortgage and loan portfolio. It was the latest sign that the credit crisis has spread beyond the U.S.

Japan’s Nikkei stock average fell 1.26 percent. Britain’s FTSE 100 fell 5.30 percent, Germany’s DAX index fell 4.23 percent, and France’s CAC-40 fell 5.04 percent.

Citigroup’s acquisition will include five depository institutions and the assumption of debt. The FDIC said Citigroup will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC said it would cover any additional losses. The FDIC gets $12 billion in preferred stock and warrants under the deal. Citi fell 44 cents, or 2.2 percent, to $19.71.

Meanwhile, consumer spending fell in August to its lowest level in six months. The Commerce Department said spending remained unchanged rather than increasing 0.2 percent as economists had expected. It was the worst showing since February.

Personal incomes rose a better-than-expected 0.5 percent after falling 0.6 percent drop in July. But after-tax incomes fell by 0.9 percent. Incomes benefited in past months from the government’s stimulus checks.

Wall Street is also worried about overall sluggishness in the world’s economy. In the U.S., for example, unemployment now sits at a five-year high of 6.1 percent. That rate is expected to increase, perhaps putting further pressure on consumer spending, which accounts for more than two-thirds of the nation’s economic activity.

Good,

Now maybe the idiots in congress will do something that affects the people and not the re-election efforts for thier congressional districts. If these morons only realized if they went to work every day and did what the pepole really wanted, they would be elected for life.

Hell, when the dow drops 778 points, alot of companies are down 12.8%

One thing is for sure..... the days of loans without 20% down are over. They have to be if anything is going to recover.

No money down? Go back to renting an appt. and buy a cheap used car.

The way it should have been to begin with.

Ron Paul on the Failed Bailout Vote

YouTube
September 29, 2008

The biggest robbery in history....Michael Moore on the bailout plan...a must read!!!
http://www.michaelmoore.com/words/message/index.php?id=235

The Rich Are Staging a Coup This Morning ...a message from Michael Moore

Friends,

Let me cut to the chase. The biggest robbery in the history of this country is taking place as you read this. Though no guns are being used, 300 million hostages are being taken. Make no mistake about it: After stealing a half trillion dollars to line the pockets of their war-profiteering backers for the past five years, after lining the pockets of their fellow oilmen to the tune of over a hundred billion dollars in just the last two years, Bush and his cronies -- who must soon vacate the White House -- are looting the U.S. Treasury of every dollar they can grab. They are swiping as much of the silverware as they can on their way out the door.

No matter what they say, no matter how many scare words they use, they are up to their old tricks of creating fear and confusion in order to make and keep themselves and the upper one percent filthy rich. Just read the first four paragraphs of the lead story in last Monday's New York Times and you can see what the real deal is:

"Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.

"Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

"At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

"Nobody wants to be left out of Treasury's proposal to buy up bad assets of financial institutions."

Unbelievable. Wall Street and its backers created this mess and now they are going to clean up like bandits. Even Rudy Giuliani is lobbying for his firm to be hired (and paid) to "consult" in the bailout.

The problem is, nobody truly knows what this "collapse" is all about. Even Treasury Secretary Paulson admitted he doesn't know the exact amount that is needed (he just picked the $700 billion number out of his head!). The head of the congressional budget office said he can't figure it out nor can he explain it to anyone.

And yet, they are screeching about how the end is near! Panic! Recession! The Great Depression! Y2K! Bird flu! Killer bees! We must pass the bailout bill today!! The sky is falling! The sky is falling!

Falling for whom? NOTHING in this "bailout" package will lower the price of the gas you have to put in your car to get to work. NOTHING in this bill will protect you from losing your home. NOTHING in this bill will give you health insurance.

Health insurance? Mike, why are you bringing this up? What's this got to do with the Wall Street collapse?

It has everything to do with it. This so-called "collapse" was triggered by the massive defaulting and foreclosures going on with people's home mortgages. Do you know why so many Americans are losing their homes? To hear the Republicans describe it, it's because too many working class idiots were given mortgages that they really couldn't afford. Here's the truth: The number one cause of people declaring bankruptcy is because of medical bills. Let me state this simply: If we had had universal health coverage, this mortgage "crisis" may never have happened.

This bailout's mission is to protect the obscene amount of wealth that has been accumulated in the last eight years. It's to protect the top shareholders who own and control corporate America. It's to make sure their yachts and mansions and "way of life" go uninterrupted while the rest of America suffers and struggles to pay the bills. Let the rich suffer for once. Let them pay for the bailout. We are spending 400 million dollars a day on the war in Iraq. Let them end the war immediately and save us all another half-trillion dollars!

I have to stop writing this and you have to stop reading it. They are staging a financial coup this morning in our country. They are hoping Congress will act fast before they stop to think, before we have a chance to stop them ourselves. So stop reading this and do something -- NOW! Here's what you can do immediately:

1. Call or e-mail Senator Obama. Tell him he does not need to be sitting there trying to help prop up Bush and Cheney and the mess they've made. Tell him we know he has the smarts to slow this thing down and figure out what's the best route to take. Tell him the rich have to pay for whatever help is offered. Use the leverage we have now to insist on a moratorium on home foreclosures, to insist on a move to universal health coverage, and tell him that we the people need to be in charge of the economic decisions that affect our lives, not the barons of Wall Street.

2. Take to the streets. Participate in one of the hundreds of quickly-called demonstrations that are taking place all over the country (especially those near Wall Street and DC).

3. Call your Representative in Congress and your Senators. (click here to find their phone numbers). Tell them what you told Senator Obama.

When you screw up in life, there is hell to pay. Each and every one of you reading this knows that basic lesson and has paid the consequences of your actions at some point. In this great democracy, we cannot let there be one set of rules for the vast majority of hard-working citizens, and another set of rules for the elite, who, when they screw up, are handed one more gift on a silver platter. No more! Not again!

Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com

P.S. Having read further the details of this bailout bill, you need to know you are being lied to. They talk about how they will prevent golden parachutes. It says NOTHING about what these executives and fat cats will make in SALARY. According to Rep. Brad Sherman of California, these top managers will continue to receive million-dollar-a-month paychecks under this new bill. There is no direct ownership given to the American people for the money being handed over. Foreign banks and investors will be allowed to receive billion-dollar handouts. A large chunk of this $700 billion is going to be given directly to Chinese and Middle Eastern banks. There is NO guarantee of ever seeing that money again.

P.P.S. From talking to people I know in DC, they say the reason so many Dems are behind this is because Wall Street this weekend put a gun to their heads and said either turn over the $700 billion or the first thing we'll start blowing up are the pension funds and 401(k)s of your middle class constituents. The Dems are scared they may make good on their threat. But this is not the time to back down or act like the typical Democrat we have witnessed for the last eight years. The Dems handed a stolen election over to Bush. The Dems gave Bush the votes he needed to invade a sovereign country. Once they took over Congress in 2007, they refused to pull the plug on the war. And now they have been cowered into being accomplices in the crime of the century. You have to call them now and say "NO!" If we let them do this, just imagine how hard it will be to get anything good done when President Obama is in the White House. THESE DEMOCRATS ARE ONLY AS STRONG AS THE BACKBONE WE GIVE THEM. CALL CONGRESS NOW.

Ron Paul gets the men of the year award!

A small adjustment. Maybe bad-ass Americans will import less asparagus by air from Peru - the trucks in Peru rolling past malnourished chidren; stop shopping in supermarkets that require a minor power station belching GHG to keep them alive; stop driving trucks that do 12 mpg; stop exporting corn to Mexico at highly subisidised prices so Mexican farmers are forced into the drug trade; Bad ass US goverment bails out Ford and GM again; huge soft loan; so they can carry on producing gas guzlers. Healthy exercise growing food on local plots - riding bicycles - a much bigger adjustment could help save the planet!
S.

Even Shelia Jackson Lee voted against this plan, one of the most radical and liberal of the group voted NO. WOW will wonders never cease.

Wish I could see the Ron Paul vid, but youtube is blocked at the office. I have this to say, I'm glad I am not a congressman forced to make this decision. In spirit and philosophy I'm against the bail out, but to me it is not an open-and-shut case. The government must proceed with extreme caution because ultimately we have to make sure that the business owners and entrepreneurs on Main Street have access to short-term working capital so everyone else on Main Street can stay on their feet.

It is easy for a nationalised bank to lend money to worthy applicants. The US govenrment gave soft loans to Ford/GM in the last few days. The government doen't need these stupid Wall Street types hiding billions of taxpayers money in Swiss Bank accounts. Fortis in Europe has been partially nationalised, Icelandic and British banks nationalised. Applicant co or entepreneur fills out form on Internet - has accounts made up in standardised form - has the documents notarised - and presenjts them. If the loan is secured - on shares - property - etc. a valuation and if all is well a chequebook is issued.
If banks are not performing their function - distributing credit - in a sensible way this is the only solution.
S,