[url]http://financialservices.house.gov/essa/final_bill_section-by-section.pdf[/url]

[quote=ewmayer;144020][URL="http://money.cnn.com/2008/09/26/news/economy/easton_backlash.fortune/index.htm?postversion=2008092811"]Main Street turns against Wall Street[/URL]- [I]A populist backlash is changing America's political climate. And it could haunt business leaders for years to come.[/I][/quote]Notice how this is fitting in with the theory that Arthur Schlesinger Jr. wrote about in his book “The Cycles of American History" (and that I referred to while writing in the "New U.S. President" thread last March about the effects of differences in candidates' ages --[URL]http://mersenneforum.org/showpost.php?p=127816&postcount=223[/URL]), and also my own (but not exclusive to me) "pendulum" theory.

In a February 2008 article in [I]The Atlantic Times[/I], Josef Joffe wrote [quote=http://www.atlantic-times.com/archive_detail.php?recordID=1169]

Schlesinger drafted a “law” that was both simple and compelling: American history, according to Schlesinger, is a succession of 30-year cycles. They oscillate between “public purpose” and “private interest,” between market forces being tamed and unleashed, between expanding and retreating government.[/quote]

Schlesinger's theory had something to say about candidate age differences, but is much more relevant to [I]what our country's reaction to the current financial mess means for the next few decades in America[/I]. Joffe argued that the U.S. seemed to be ending one of the "private interest" cycles and starting a new "public purpose" cycle.

I think this also ties in with my previously-expressed idea that conservatives have swung the national pendulum too far to the right, that we now will have a backlash (swingback, whatever ...) to the left, and that the magnitude of this next swing of the pendulum will be proportional to the excessive amount by which conservatives imposed, or tried to impose, their worldview on the nation instead of compromising with liberals to generate more middle-of-the-road policies and laws. That is, I've been arguing for about a decade that if conservatives were more content to reach political compromises with liberals instead of stretching things as far their way as they could, the result could be that, in the long run, they could see more of their wish-list continue to be implemented than they will now after being so extremist.

IMO the current financial crisis is a glaring example of how the just-past three-decade period of reducing federal government regulation has overshot the most reasonable middle-of-the-road marks. Now the "populist backlash" will threaten (and probably succeed in) its own overshooting past the middling ideal too far onto the other, leftist side.

Look at some of what Nina Easton wrote in that "Main Street turns against Wall Street" article Ernst linked above, besides what Ernst quoted:

[quote]... A month of historic government interventions shows signs of triggering a political version of climate change - unleashing a new era of class fury that could hurt U.S. companies, business leaders, and wealthy investors for years.

...

"A potential calamity," predicts Democratic pollster Doug Schoen. "If the reactions we're seeing hold, we could have real spasmodic anger directed at businesses and corporations."

...

When the financial crisis does pass, its political legacy will remain. Resentment toward financial profiteers is reaching a fever pitch.

...

Even before this populist eruption over the Wall Street rescue, Middle America was souring on the privileged class. There has been a growing sense in the U.S. that a stagnant tide has kept the 80-foot yachts afloat while beaching the family outboard. At the start of the presidential race, the Pew Research Center found that three-quarters of Americans agreed with the statement that the "rich are getting richer while the poor are getting poorer" - up 8 percentage points from five years earlier. Some 43% also agreed that America is divided into haves and have-nots, another big jump from past years.

...

It will also be impossible - in the foreseeable future - for a Republican president to sell Congress any version of private accounts to augment Social Security.

While consensus is widespread in both parties that there needs to be thicker capital buffers and more openness in the financial markets, many fear what Romney calls a draconian backlash in Congress that will choke off capital flows. "The greatest danger is that we do a Sarbanes-Oxley squared on the financial system," says Harvard professor Ken Rogoff, former chief economist at the International Monetary Fund. "That would cripple what - even after this disaster - has to be regarded as one of the most innovative, dynamic sectors in the economy. It's not all evil. There's some necessary regulation: We need higher capital requirements, more transparent markets. But goodness, we don't want to choke off the sector."

...

[B]The collateral damage[/B] to the business agenda will be far more sweeping. Take trade. Even with a decent economy, Bush was unable to get major trade deals passed because a rising populist tide emboldened Democrats. Now it's going to be even harder. By contrast, an Obama agenda of aiding union-organizing efforts, raising taxes on capital gains, and imposing a windfall-profits tax on oil is looking more enticing.

Rogoff is right: Not everyone in the financial market is "evil," and there's a risk in Washington of throwing out America's best innovations - best risk taking even - with the detritus that caused today's crisis. But politically speaking, corporate America - most of which has nothing to do with the Wall Street mess - has been summarily dethroned. And it will be a long slog back.[/quote]Will many conservatives remember all this when they next get into power? Almost certainly not, I'd bet. (But I'd love to lose this bet!! Surprise me, guys and gals of the Right!!)

Will liberals learn from it, and moderate their own swing so as not to provoke such a strong counter-reaction three decades or so from now? (* sigh *) Probably not, either.

I'll keep on pointing out lessons from history, because I'm basically an optimist.

Wachovia goes under | Bank bailouts sweep Europe
 

[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aN8cVWE5f4Xc&refer=news]Citigroup to Take Over Wachovia Bank Business, Absorb Losses With FDIC Aid[/url]: [i]Citigroup Inc., the biggest U.S. bank by assets, will acquire banking operations of Wachovia Corp. for about $1.6 billion after shares of the North Carolina lender collapsed under the weight of overdue mortgages.[/i]
[quote]Wachovia's stock, which finished last week at $10 on the New York Stock Exchange, traded for 95 cents at 9 a.m. in early transactions. It had lost 83 percent in the past two years as of last week. Trading today was halted during regular hours. Citigroup fell 1.4 percent to $19.86 as of 10:19 a.m. [/quote]
[b]My Comment:[/b] If you check out the Yahoo Finance [url=http://messages.finance.yahoo.com/mb/WB]message board for Wachovia[/url], you'll still see plenty of posts from delusional WB shareholders who think that the fact that trading was halted shortly after open today and that their Scottrade [substitute name of any bargain-basement daytraders-R-us online brokerage here] shows a bid of [insert some bogus number > $1] is a good sign. For a classic example of this kind "delusional long or daytrading moron who deserves to lose his shirt", check out e.g. the post from user hankaaronstrikesout [or something starting with hankaaron] [url=http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_W/threadview?m=te&bn=19722&tid=117892&mid=117892&tof=9&frt=2#117892]here[/url].


[url=http://money.cnn.com/2008/09/29/news/international/Europebanks_bailout.ap/index.htm]Bank bailouts sweep Europe[/url]: [i]European governments, including Belgium, Netherlands, Luxembourg and Britain, intervene to prop up weakened banks as crisis deepens.[/i]
[quote]LONDON (AP) -- European governments had to step in with a flurry of major bank bailouts from Iceland to Germany as fear and turmoil from the U.S. credit crisis spread through the financial system.

Even as U.S. lawmakers were preparing to vote on a massive $700 billion (€490 billion) rescue of their own banks, the governments of Belgium, the Netherlands and Luxembourg took partial control late Sunday of struggling bank Fortis NV (FORSY), while Britain seized control of mortgage lender Bradford & Bingley (BDBYF) early Monday.

Germany organized a credit lifeline for blue-chip commercial real estate lender Hypo Real Estate Holding AG, while Iceland's government took over Glitnir bank, the country's third largest.[/quote]


[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aPQXoCH.fIa0&refer=news]Lehman's `100% Principal Protection' Means Pennies on Dollar for Its Notes[/url]: [i]A brochure pitching $1.84 million of notes sold by Lehman Brothers Holdings Inc. in August, a month before the firm filed for bankruptcy, promised ``100 percent principal protection.''[/i]


[url=http://money.cnn.com/2008/09/29/news/companies/Freddie_attorneyprobe.ap/index.htm]U.S. probes Fannie, Freddie accounting and disclosure issues[/url]: [i]U.S. Attorney's office issues subpoenas while the SEC orders the troubled housing giant to preserve documents.[/i]


[url=http://www.reuters.com/article/marketsNews/idINN2630088120080928?rpc=44]Hedge funds grudgingly to reveal US short positions[/url]
[quote] WASHINGTON/NEW YORK Sept 28 (Reuters) - Hedge fund managers are reluctantly preparing to disclose their short positions to U.S. regulators on Monday, a move set to give a rare public glimpse into their secretive trading strategies two weeks later.

For shareholders who have blamed short sellers for driving down company stocks, it will be a chance to see who is targeting their firm.

It is also an experiment by U.S. securities regulators, putting short sellers briefly on a similar footing to large investors who accumulate stocks and are required to regularly disclose their positions publicly.

Under a temporary Securities and Exchange Commission order, big money managers will have to reveal the number and value of securities sold short each day last week.

The disclosures are part of a series of measures the SEC has undertaken to crack down on market manipulation with an eye to calming markets rocked by a series of bank failures and fears the credit crisis will worsen.[/quote]
[b]My Comment:[/b] I find the last sentence particulraly ironic, given that for the past year, the SEC, Fed and Treasury have been far and away the biggest market manipulators, and have put the taxpayer-funded propping up of [especially financial firms`] share prices ahead of all else.


[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=a9KxV2I_AtLc&refer=news]Buffett Wagers $5 Billion Goldman Won`t Turn Into Another Salomon Misstep[/url]: [i]Warren Buffett, the billionaire who decried Wall Street's ``casino'' mentality, is back at the table 11 years after making his last bet.[/i]
[quote]The Salomon investment returned about 279 percent over the 14 years Buffett held his stake, said Martin, who has studied Buffett's investment history. Martin's pretax calculation includes dividends and returns from Travelers Group Inc., which acquired Salomon in 1997, and Citigroup Inc., which acquired Travelers in 1998. That's less than the fivefold return, including dividends, in the benchmark Standard & Poor's 500 Index over about the same span.[/quote]
[b]My Comment:[/b] That's actually very mediocre, when you add the huge incentives Buffett got from Salomon for his purchase, and factor in the "Buffett Effect", whereby his merely taking a stake is usually enough to give the share price a big boost. It's nice to be able to move markets by your mere presence...of course that kind of reputation doesn't accrue to just anyone.

[QUOTE=ewmayer;144064][b]My Comment:[/b] If you check out the Yahoo Finance [url=http://messages.finance.yahoo.com/mb/WB]message board for Wachovia[/url], you'll still see plenty of posts from delusional WB shareholders who think that the fact that trading was halted shortly after open today and that their Scottrade [substitute name of any bargain-basement daytraders-R-us online brokerage here] shows a bid of [insert some bogus number > $1] is a good sign.[/QUOTE]

There may actually be some value left in WB. At this point it is unclear just what assets and liabilities remain. As I understand it, the brokerage (AG Edwards) and investment management (Evergreen) businesses will remain as will the ~$1 of Citibank stock.

Of course, you might be better off in having ZERO value because then you could just "write it off" without encountering the trading expense to dispose of a few shares of a penny stock.

Breaking News: House Votes "NO"!
 

Just saw this atop the CNNMoney page - the writer was in such a hurry he didn't even have time to spellcheck it. More news to follow:

[quote]Dow plunges 700 points as votes in the House aganst the historic bailout plan mount. More soon.[/quote]

[b]Update:[/b] Here's the story from [i]Bloomberg[/i]:

[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aovs_9KFtWgA&refer=news]U.S. House Rejects $700 Billion Financial-Rescue Plan[/url]
[quote] Sept. 29 (Bloomberg) -- The U.S. House rejected a $700 billion financial-rescue plan intended to restore confidence in the nation's banking system, dealing a blow to government efforts to contain a lending crisis.

The House rejected by a vote of 228 to 205 the measure to authorize the biggest government intervention in the markets since the Great Depression.

The Dow Jones Industrial Average fell 554 points, or almost 5 percent to 10,589, at 2:32 p.m. New York time.

``The American people rejected this bailout and now Congress did likewise,'' said Republican Representative Mike Pence of Indiana.

The legislation would have given Treasury Secretary Henry Paulson broad authority to buy troubled assets from financial companies.

``I'm very disappointed,'' said House Financial Services Committee Chairman Barney Frank. ``The Republicans killed this.'' He said there would not be another vote on the issue today.

President George W. Bush, who personally lobbied lawmakers to support the measure today, will consult with congressional leaders ``to determine the next step,'' said spokesman Tony Fratto.[/quote]
[b]My Comment:[/b] If Dubya [by way of official White House spokestool Tony "The Weasel" Fratto] is "disappointed", it can't be all bad ... This will likely lead to some serious pain in the major stock market indices near-term, but those were only being propped up by wave after wave of unprecedented government intervention anyway. This is what free-marketeers [not to be confused with the fake ones who run most of Wall Street] refer to as "price discovery". As with housing, it may be painful but it is absolutely a necessary step in getting back toward reasonable valuations of just about everything.

Apparently it was a revolt by house republicans against their own leadership [which had adopted an official "hold your nose and vote for it" stance] that did in the bill. Credit where credit is due. [Pun fully intended - "credit where credit is not due" of course being the root of the last decade's speculative excesses.].

This makes an already-very-interesting runup to the U.S. presidential election even more so, given that both Obama and McCain came out in support of the bill. Especially for McCain, how will he spin that fully 2/3 of his own party's representatives in the House voted against the bill?

There are 6 phases to any project.

Enthusiasm - 1995
Disillusionment - 2007
Panic - 2008
Search for the guilty - 2009
Punishment of the innocent - 2009
Praise and honors for the non-participants - 2010

[url]http://wallstreetmarketnews.blogspot.com/[/url]

The blame game will be played to the hilt by politicians because they don't know any other way to avoid being clobbered by this situation. It will be a finger pointing exercise to put all previous political fiascos to shame.

DarJones

[QUOTE=Fusion_power;144073]The blame game will be played to the hilt by politicians because they don't know any other way to avoid being clobbered by this situation. It will be a finger pointing exercise to put all previous political fiascos to shame.[/QUOTE]

If the finger-pointing actually keeps them from throwing unprecedented amounts of [borrowed] money at the problem in the guise of an ill-conceived quick fix which most likely would only delay the eventual day of reckoning, I'm all for it.

Yes, "Something needs to be done" - but not this.

And the REAL "something" must involve us as a nation [at the personal-financial, energy-use, and governmental levels] LEARNING TO LIVE WITHIN OUR MEANS. Anything that purports to be a way out of the mess which does not involve that fundamental back-to-sustainable-basics readjustment is just another false promise.

Obviously, for a society so completely addicted to debt, learning to live within our collective means will entail a painful adjustment - the analogy to a heroin junkie suffering withdrawal is very apt. The best one can hope to do is to slightly palliate the pain.

Another painful readjustment Americans will be facing - the loss of worldwide financial hegemony:

[url=http://online.wsj.com/article/SB122262725903283485.html?mod=mktw]WSJ | Financial Troubles Humble U.S.[/url]
[quote]The U.S. is turning to foreign governments and other overseas investors to buy a good chunk of what could total $700 billion in Treasury debt expected to finance the bailout. Foreign investors also are needed to shore up the depleted capital of the nation's financial institutions, seen in the plan by Japan's Mitsubishi UFJ Financial Group to buy a large stake in Morgan Stanley, which is weighed down by bad debt and market distrust.

This is a bittersweet moment in U.S. economic history. In one sense, the growing importance of foreign cash represents the triumph of a half-century of U.S. proselytizing for a global financial system in which money flows from those who have it to those who need it. But it is also an unmistakable sign of U.S. economic decline. The global financial system the U.S. designed had anticipated that American banks and financial firms would be the world's financial lifeguards; now those institutions are like exhausted swimmers a stroke or two away from drowning.

The financial crisis makes clear how much the interests of foreign lenders have become a top concern in Washington. A big reason the Fed and Treasury stepped in to rescue mortgage giants Fannie Mae and Freddie Mac, say U.S. financial officials, was to reassure foreign leaders including China, which holds roughly $1 trillion in U.S. debt, that U.S. securities were safe. "Superpowers do not normally ask their diplomats to reassure other nations on questions of credit-worthiness," says former U.S. Treasury Secretary Lawrence Summers.

Foreign lenders have a great deal of sway. If they were to dump U.S. government debt -- or be unwilling to buy more -- the interest rates needed to attract buyers of Treasurys would soar. The already fragile U.S. economy would absorb yet another hit.

China, Saudi Arabia and other big foreign holders are unlikely to take antidollar measures precisely because they own so much U.S. debt. To the extent the dollar declines, so does the value of those nations' holdings. Mr. Summers calls this situation "the financial balance of terror."

But it is naive to assume that this so-called balance will protect U.S. interests indefinitely. Senior Chinese economists have voiced growing dismay about the outlook for the dollar, and the introduction of an additional $700 billion in debt might drive the currency's value down further, at least in the short term. "I think foreigners are being taken for a ride by the U.S. government," says Andy Xie, an independent economist in Shanghai.

Sovereign-wealth funds -- huge government investment funds -- have largely sat on their hands rather than buy additional stakes in U.S. financial firms. China Investment Corp., for instance, has been wary of increasing its investment in Morgan Stanley after it was criticized sharply at home for taking equity stakes in U.S. financial companies that have nose-dived.

Domestically, the reliance on foreign money means a loss of autonomy that Americans are simply going to have to get used to. Part of the accommodation is already occurring. The controversy over investments by sovereign-wealth funds has been reversed. Last year, lawmakers worried the funds would gain political influence by investments in U.S. companies; now U.S. policy makers are worried that they won't buy new stakes. Efforts to erect restrictions against foreign trade may also lose momentum. The U.S. needs the world's money more than it thought it would and won't want to rile potential lenders.[/quote]
[b]My Comment:[/b] I believe the current crisis will end up marking the end of the global U.S.-dominated financial empire in very much the same way that WW2 marked the end of the British colonial empire.

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
3rd president of US (1743 - 1826)

House GOP to Wall Street: "No Soup for You!"
 

[url=http://money.cnn.com/2008/09/29/magazines/fortune/nobailout_easton.fortune/index.htm]Fortune | Why the bailout bombed[/url]: [i]Republicans might blame Pelosi's rhetoric, but the message that mattered was the one that came from voters back home.[/i]
[quote]WASHINGTON (Fortune) -- Barely containing his temper, Virginia's Eric Cantor, deputy whip for the House Republicans, stepped to the microphone this afternoon to blame the bailout defeat on House Speaker Nancy Pelosi's "failure to listen" and her charged partisan rhetoric in condemning President George Bush's "budgetary recklessness" and "anything-goes mentality."

If only it were that simple. If only the failure of the White House to muster enough votes from its own party to avert what it calls looming financial disaster could be blamed on a few ill-chosen words uttered on the House floor by San Francisco's hyper-partisan speaker.

In fact, Monday's surprise defeat of the $700 billion rescue package - meant to blunt a burgeoning financial crisis - can be traced to a failure on the part of the president and his treasury secretary, Henry Paulson, to fully appreciate the ferocity of the popular revolt they touched off nine days ago.[/quote]

And speaking of soup, that was one of the few equity investments which didn't get hammered in today`s selloff:

[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aFVo3p8GzeWk&refer=news]S&P 500 Falls Most Since 1987, Dow Has Worst Point Drop as Rescue Defeated[/url]: [i]U.S. stocks plunged and the Standard & Poor's 500 Index tumbled the most since the 1987 crash after the House of Representatives rejected a $700 billion plan to rescue the financial system. [/i]
[quote]The S&P 500 sank to its lowest level since October 2004 as all 10 of its industry groups tumbled at least 4.2 percent. [b]Campbell Soup Co. was the only stock in the benchmark index for U.S. equities to advance.[/b][/quote]

[QUOTE=ewmayer;144075][b]My Comment:[/b] I believe the current crisis will end up marking the end of the global U.S.-dominated financial empire in very much the same way that WW2 marked the end of the British colonial empire.[/QUOTE]I think you chose the wrong defining event for the latter. For a start, the British Empire is still alive and well and the sun still never sets on it. Admittedly, the largest colony by area is the Falklands and the largest by population is Bermuda, while there are only 37 minutes worst case between sunrise in the BIOT and sunset in Pitcairn. However, I'm quibbling in this particular respect. Important parts of the Empire were lost between 1948 and 1970, though (with the exception of India) the majority gained independence in the 18th, 19th and very early 20th centuries (almost all North America, much of Australasia, South Africa) --- long before WW2.

Of that which survived WW2, I personally believe that the end of the Empire became inevitable after the mid-1930s. WW1 and the Depression were, IMO, far more important triggers than WW2. Ireland was lost in large part because of WW1 and it was clear to everyone by 1935 that India would be independent within a decade or so. Indeed, one could argue that WW2 delayed the loss of the most important part of the Empire by a few years.


Paul

Record 16% drop in July home prices | Euro Update
 

[url=http://money.cnn.com/2008/09/30/real_estate/Prices_plunge.ap/index.htm]Record 16% drop in July home prices[/url]: [i]July home prices plunge 16.3% in 12 months, according to the Standard & Poor's/Case-Shiller 20-city housing index.[/i]
[quote]NEW YORK (AP) -- A closely watched index released Tuesday showed home prices tumbling by the sharpest annual rate ever in July, but the rate of monthly declines is slowing.

The Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3% in July from a year earlier, the largest drop since its inception in 2000. The 10-city index plunged 17.5%, the biggest decline in its 21-year history.

Prices in the 20-city index have plummeted nearly 20% since peaking in July 2006. The 10-city index has fallen more than 21% since its peak in June 2006.

No city in the Case-Shiller 20-city index saw annual price gains in July, the fourth straight month that has happened.

However, the pace of monthly declines is slowing, a possible silver lining. Between May and July, for example, home prices fell at a cumulative rate of 2.2% - less than half the cumulative rate experienced between February and April.[/quote]
[b]My Comment:[/b] I think "silver lining" is a much too precious-metallic metaphor here - "rock bottom" would seem to fit the situation much more nicely. [Or perhaps "more gneissly"?]


[url=http://money.cnn.com/2008/09/29/news/economy/personal_income_spending/index.htm]Consumer spending loses steam[/url]: [i]Government report shows American incomes rose 0.5% last month, but personal spending nearly ground to a halt.[/i]
[quote]After adjusting for taxes and certain price changes, however, real disposable income contracted 0.9%, according to the report. [/quote]
[b]My Comment:[/b] Since "real income" declined nearly 1% and spending stayed flast, it would seem we are still collectively spending more than we can afford to - that means the real belt-tightening [which likely will be roughly signaled by a huge wave of credit-card defaults in the coming 12 months] has not yet begun.


[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=a.lG6SHwRN2o&refer=news]Stocks in U.S. Rally on Speculation Rescue Plan to Pass; JPMorgan Advances[/url]: [i]U.S. stocks rose as growing expectations that lawmakers will salvage a $700 billion bank- rescue package helped the Standard & Poor's 500 Index recover more than a third of yesterday's 8.8 percent plunge.[/i]

[b]My Comment:[/b] This is completely typical of the past year: the only things propping the markets up have been [1] delusional hope, [2] government intervention, and [3] delusional hope of government intervention.


[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=a2r99gEsqU3k&refer=news]Libor Rises Most on Record After U.S. Congress Rejects Bailout [/url]
[quote] Sept. 30 (Bloomberg) -- The cost of borrowing in dollars overnight rose the most on record after the U.S. Congress rejected a $700 billion bank-rescue plan, putting an unprecedented squeeze on the global financial system.

The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said. The euro interbank offered rate, or Euribor, for one-month loans jumped to a record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, also increased to an all-time high.

``This is unheard of, the money markets should be the engine driving the financial system but they have broken down,'' said Kornelius Purps, a fixed-income strategist in Munich for UniCredit Markets and Investment Banking, a unit of Italy's largest lender. ``Any institution that hasn't completed its 2008 funding needs by now is going to be in very serious trouble. More banks are going to need to be bailed out.''

The seizure in the credit markets is tipping lenders toward insolvency, forcing U.S. and European governments to rescue five banks in the past two days, including Dexia SA, the world's biggest provider of loans to local governments, and Wachovia Corp. Money-market rates climbed even after the Federal Reserve yesterday more than doubled the size of its dollar-swap line with foreign central banks to $620 billion. In Europe, banks borrowed dollars from the ECB at almost six times the Fed's benchmark interest rate today.[/quote]


[b]Eurozone Update:[/b]

[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=a3CjRgrLfAjE&refer=news]EU Nations May Get More Say on Their Banks' Foreign Units as Crisis Widens[/url]: [i]Regulators in individual European Union countries would get enhanced authority to police banks' foreign subsidiaries under a draft proposal before the EU.[/i]


[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=au8VlZ7ySFtw&refer=news]Bradford & Bingley Customers Wonder `What's Safe?' as British Banks Vanish[/url]: [i]June Dean stood outside a branch of Bradford & Bingley Plc in the northern London suburb of Finchley after taking out 10,000 pounds ($18,000) of her savings, and asked where her money will be safest.[/i]


[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=a69EMDoo_gzw&refer=news]Brown, Merkel May Swallow Criticism, Adopt Paulson-Style Bailout Package[/url]: [i]European politicians are discovering what cometh after pride.[/i]


[url=http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=cc54fb7b-e31a-438a-8bc0-98aa591ba594]Irish Government Moves To Safeguard Banking System[/url]: [i]The Irish government Tuesday announced a surprise decision to safeguard the Irish banking system for two years, guaranteeing all deposits, covered bonds, senior debt and dated subordinated debt of the four main banks.[/i]

This latter approach brings us full circle back to possible approaches to shoring up the U.S. financial system without putting too much taxpayer money into the hands of Wall Street:

[url=http://globaleconomicanalysis.blogspot.com/]How To Stop A Run On The Banks[/url]
[quote]Former Treasurer For A Large US Bank Chimes In

Minyan Peter, a former treasurer for a large US bank has these thoughts.
[i]
Just Protect The Deposits

What Ireland is fighting is the same thing that the Fed is trying to fight here (outflows from banks and money market funds into short term government debt.)

Remember the problem is NOT mom and pop puling bank deposits, it is corporate treasurers and state treasurers whose jobs are on the line pulling deposits from weak banks and putting them into stronger ones.

The fastest way for the US and other governments to solve this is to raise deposit insurance ceilings. And to me it is a no-brainer (especially versus ballooning the Fed's balance sheet more.)

At the same time, I would highlight that fully guaranteed deposits would put the US government even more at the top of the capital structure of banks. Existing senior debt is all of a sudden now fully subordinated to a potentially unlimited amount of insured deposit debt.

I would offer that the final solution to our crisis will require a combination of both. Honestly, I would much rather see $700 billion used that way, versus what is currently on the table in Washington.[/i][/quote]
[b]My Comment:[/b] I see that of the 2 major-party presidential candidates, Obama is calling for something along these lines, but not [yet] nearly as comprehensive, and still in the context of a Paulson-style mega-bailout which is actually a tera-bailout at this point]:

[url=http://money.cnn.com/2008/09/30/news/economy/Obama_FDIC/index.htm]Obama urges higher deposit insurance[/url]: [i]Democratic presidential candidate proposes raising FDIC limit from $100,000 to $250,000 in hope of gaining legislative support for $700B bailout[/i]