Bush seeking $700 billion for financial bailout

Plan being rushed to Congress; Treasury would get sweeping power

20 September 2008

WASHINGTON - The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained Saturday by The Associated Press.

The plan would give the government broad power to buy the bad debt of any U.S. financial institution for the next two years. It would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. The proposal does not specify what the government would get in return from financial companies for the federal assistance.

“We’re going to work with Congress to get a bill done quickly,” President Bush said at the White House. Without discussing details of the plan, he said, “This is a big package because it was a big problem.”

The White House and congressional leaders are hoping the legislation, which is still being developed, could pass as early as next week.

Administration officials and members of Congress were to negotiate through the weekend. The plan is designed to let faltering financial institutions unload their distressed mortgage-related assets on the government, and in turn the taxpayer, in a bid to avoid dire economic consequences.

Bush said he worried the financial troubles “could ripple throughout” the economy and affect average citizens. “The risk of doing nothing far outweighs the risk of the package, and over time we’re going to get a lot of the money back.”

He added, “People are beginning to doubt our system, people were losing confidence, and I understand it’s important to have confidence in our financial system.”

“In my judgment, based upon the advice of a lot of people who know how markets work, this problem wasn’t going to be contained to just the financial community,” the president said. He said he was concerned about “Main Street” and that what happens on “Wall Street” affects “Main Street.”

Sen. Chuck Schumer, D-N.Y., called the proposal “a good foundation,” but raised concerns it “includes no visible protection for taxpayers or homeowners.”

Democrats are insisting the rescue include mortgage help to let struggling homeowners avoid foreclosures. They also are also considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.

Asked about the chances of adding such items, Bush sidestepped the question, saying only that now was not the time for political posturing. “The cleaner the better,” he said about legislation he hopes Congress sends back to him at the White House.

If passed by Congress, the plan would give the Treasury secretary broad power to buy and sell the mortgage-related investments without any additional involvement by lawmakers. The proposal, however, would require that the congressional committees with oversight on budget, tax and financial services issues be briefed within three months of the government’s first use of the rescue power, and every six months after that.

While the proposal contains no requirement that the government receive anything from banks in return for unloading their bad assets, it would allow the Treasury Department to designate financial institutions as “agents of the government,” and mandate that they perform any “reasonable duties” that might entail.

In a briefing to lawmakers Friday, Paulson and Federal Reserve Chairman Ben Bernanke painted a grave picture of an economy on the edge of a major recession and telling them that action was urgent and imperative.

In a session with House Democrats, they described a plan where the government would in essence set up reverse auctions, putting up money for a class of distressed assets — such as loans that are delinquent but not in default — and financial institutions would compete for how little they would accept for the investments, said Rep. Brad Sherman, D-Calif., who participated in the conference call.

“You give them good cash; they give you the worst of the worst,” Sherman said. A critic of the plan, he complained that Bush and his economic advisers were trying to panic lawmakers into rubber-stamping it.

Paulson said the new troubled-asset relief program must be large enough to have the necessary impact while protecting taxpayers as much as possible.

“I am convinced that this bold approach will cost American families far less than the alternative — a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion,” Paulson said. “The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing.”

Administration officials hoped the rescue plan could be finalized this weekend, to lend calm to Monday morning’s market openings, said Keith Hennessey, the director of the president’s economic council. The goal is to have something passed by Congress by the end of next week, when lawmakers recess for the elections.

Further Information:

U.S. President George W. Bush's Radio Address

Statement by the President on Legislation to Address Crisis in Financial Markets

Commentary

This latest idea for a financial bailout by the U.S., by some points of view is one that is more in line of trying to get blood from a turnip or robbing Peter to pay Paul; which as most people know doesn’t work.

It is like one gentlemen I heard, that the plummeting of the financial system while some people are waking-up towards the latter part of the imploding, I am guessing they are a Christian; made the remark that what is occurring is in line to Biblical proportions and they waited for the locust’s to fly through there window.

As another gentleman made the remark, that a financial crisis such as this dates back to at least two hundred years, which they may very well be correct.

The United States will press other countries to forge bailout plans for financial institutions where needed? Actually under the circumstances it is most assuredly that this would not occur especially under the present situation with the Bush Administration, for many around the globe this would be thought of as fools play.

Not being rude but, U.S. President George W. Bush early in his presidency should have spent less time of vacation fishing and playing golf, his global and domestic criminal activities; then insulting and threatening the majority of the global community, to further understanding of previous loan defaults. It further doesn’t help, to have a U.S. president that is an extreme Alcoholic, for there thinking capacity is very poor.

U.S. President George W. Bush shares a toast with Colombian President Alvaro Uribe, on 20 September 2008, during a social dinner with the President of Colombia at the White House. As much as Bush drink’s, it is a wonder he can function at all in his failed leadership and unable to decide to correct move to relieve the spiraling economic implosion.

As to those in later discussions that I heard that mentioned in the U.S. government election years, that there are more natural disasters then a non-election year, this I have never noticed. But I will say not all natural disaster’s come by Allah (God), some also come from Shaytan (Satan); which one can also tell by the signature of the disaster.

New Orleans Housing Faces Another Flood Wipeout

19 September 2008

New Orleans-Many New Orleans residents who lost homes to Hurricane Katrina could have that deja vu feeling in the future.

"USA Today" reports at least 23-hundred homes destroyed by the wind and flooding of Katrina have been rebuilt "on the cheap," skirting requirements that newly-built homes be elevated.

Larry Larson, head of the Association of State Floodplain Managers says if homeowners don't elevate, "it's the federal taxpayers who pay to fix it, time after time." The hurricanes of 2005 caused so much damage that taxpayers were forced to pony up 20-billion dollars to bail out the federal flood insurance program.

Homeowners themselves aren't necessarily to blame.

A 2006 report by the Homeland Security Department's inspector general found after Katrina, local officials would lower damage estimates so they'd fall just below a level requiring elevation for a rebuild.

Even homeowners who want to raise their homes are having difficulty.

Louisiana has spent less than ten-percent of the one-and-three-quarter-billion dollars the federal government gave the state to elevate homes damaged by storms three years ago.

K.C. King who lives in a previously flooded section of New Orleans says about 125 of his neighbors have rebuilt but only about a dozen raised their homes.
he says, quote, "if that's not a portrait of failure, I don't know what is."

Protests at 'anti-Islamification' event

19 September 2008

COLOGNE, Germany-Stone-throwing protesters have prevented a nationalist group from holding a news conference opening its "anti-Islamification" meeting on a boat in Cologne, Germany.

Posters about protests against a so-called "anti-Islam congress" of the right-wing movement "pro Koeln" in downtown Cologne.

It was not immediately clear if anyone was injured.

The demonstrators had already targeted a previous venue where the Pro-Cologne rightest group had hoped to hold the news conference Friday for the starting the congress, which was to attract support from nationalist groups across Europe.

The three-day nationalist meeting is to include plans for a big protest Saturday against the construction of a large mosque in the western German city.

Police are expecting several hundred people at the nationalist protest and up to 10 times as many at counter-demonstrations.

Further Reading:

German gov't condemns Islamophobic confab in Cologne

AG candidate backs prosecution of President Bush for murder

19 September 2008

By DANIEL BARLOW

BURLINGTON — Charlotte Dennett, the Progressive Party candidate for Vermont attorney general, said Thursday that if elected she would prosecute President Bush for murder.

Dennett, an attorney from Cambridge challenging incumbent Democrat William Sorrell, was joined by Vincent Bugliosi, a famed prosecutor who took on Charles Manson in the early 1970s, at a press conference in downtown Burlington.

As Vermont attorney general, Dennett said she would appoint Bugliosi, who published a book this year called "The Prosecution of George W. Bush for Murder," as a special prosecutor to hold Bush accountable for deaths stemming from the Iraq war.

Dennett said Vermont is the ideal state to bring murder charges against Bush, since the state has carried the country's highest per capita deaths of soldiers in the war. It is also home to nearly 40 communities that moved to impeach the president last year.

"Lots of Vermonters feel very frustrated that the impeachment efforts did not go anywhere," she said. "This is another avenue for us."

Bugliosi, a 74-year-old Los Angeles resident and author of the famed "Helter Skelter" book about his prosecution of Manson, called Dennett a "valiant and patriotic woman" willing to put her reputation on the line to bring to justice what he sees as one of the worst criminal acts in recent history.

He told a small crowd gathered in downtown Burlington on Thursday morning that his book clearly lays out evidence showing that Bush and his administration misled the American people and the U.S. Congress into war in 2003.

"George Bush and his people have gotten away with thousands and thousands of murders," Bugliosi said, citing both American and Iraqi deaths in the five-year-old war. "We, the American people, cannot let him get away with this."

Bugliosi said any state attorney general or local district attorney can bring criminal charges against Bush once he leaves office early next year. He said Vermont could take on the soon-to-be ex-president by bringing conspiracy to murder charges against him, using his own public statements during the build-up to the Iraq war as evidence.

"Bush and his administration deliberately told lies to deceive people and get the support of the country behind the war," he said. "That information went out through the media and was heard by residents of the state of Vermont."

Sorrell said Thursday that promises to prosecute Bush for murder makes "good political sound bites," but said he does not believe he — or any other local or state prosecutor — has that authority.

To bring about a murder or conspiracy to murder charge against Bush, the actual crime — the death of an individual — would need to take place within his jurisdiction, Sorrell said, which in this case is the Green Mountain State.

"And if I remember correctly, Vermont is still the only state George Bush has not visited while president," Sorrell said.

Dennett said she read "The Prosecution of George W. Bush for Murder" earlier this year and was interested in pursuing Bugliosi's notion that local prosecutors could bring criminal charges against the president.

She was put in touch with him through a friend who has a mutual publicist with Bugliosi. Within a half hour, the two were on the phone discussing the possibility of prosecuting Bush once he leaves office, she explained.

"Right away I felt a real rapport with him," she said.

But Dennett said she is not a single-issue candidate, adding that she is also interested in issues surrounding the Vermont Yankee nuclear power plant in Vernon and its proposal to extend its operating license beyond 2012.

When asked by a reporter if she thinks she has a chance against Sorrell, a well-entrenched incumbent, Dennett said she thinks the Democrat is a "nice man," but that her push to hold Bush accountable for the deaths in Iraq will "strike a chord" with Vermonters.

"I think I will have a groundswell of support," she said.

The general election is Tuesday, Nov. 4.

Palestinians Eat 'Iftar' Meal

Palestinian children prepare to eat their 'Iftar' meal offered by Prime Minister and Vice President of the United Arab Emirates and Ruler of Dubai, Sheikh Mohammad bin Rashed al-Maktoum, during the third week of Islam's holy month of Ramadan in the city of Nablus, on 17 September 2008.

Palestinians eat their 'Iftar' meal.

During Ramadan it is very common to share meals among the Ummah, which is usually greeted with much happiness and joy, because everyone that is Muslim, which makes-up the Ummah; is like one very large family that cares about each other.

In this particular case, the Palestinian people was most graciously honored with this old tradition.

Furthermore, as it is within related families as an occasion to get together during Ramadan, to break the fast and enjoy each other’s company; which is something I have always enjoyed and even at time’s, for someone to bring along a friend to share the meal for there always seems to be plenty for everyone.

I laugh about this now that I am older, but this kind of reminds me of something my mother use to say when I was a child, "if anyone left the table hungry, it was there own fault." I will admit there was times that I was told there wasn’t enough food, even though it turned out not to be so; the reason being I think, was my mother was a good manager.

Since I am now grown, there has been time’s in the past when I have suffered from extreme hunger and it seems when everything got very desperate; some how the food always seemed to appear. These time’s were usually when there were assassination attempt’s on myself, the worse was 2003 after my first husband was martyred; to early 2005.

But in the last few years, except for what happened during Hurricane Gustav, most everything has been good; for I have a good husband.

Hey U.S., welcome to the Third World!

Opinion

It's been a quick slide from economic superpower to economic basket case.

18 September 2008
by Rosa Brooks


Dear United States, Welcome to the Third World!

It's not every day that a superpower makes a bid to transform itself into a Third World nation, and we here at the World Bank and the International Monetary Fund want to be among the first to welcome you to the community of states in desperate need of international economic assistance. As you spiral into a catastrophic financial meltdown, we are delighted to respond to your Treasury Department's request that we undertake a joint stability assessment of your financial sector. In these turbulent times, we can provide services ranging from subsidized loans to expert advisors willing to perform an emergency overhaul of your entire government.

As you know, some outside intervention in your economy is overdue. Last week -- even before Wall Street's latest collapse -- 13 former finance ministers convened at the University of Virginia and agreed that you must fix your "broken financial system." Australia's Peter Costello noted that lately you've been "exporting instability" in world markets, and Yashwant Sinha, former finance minister of India, concluded, "The time has come. The U.S. should accept some monitoring by the IMF."

We hope you won't feel embarrassed as we assess the stability of your economy and suggest needed changes. Remember, many other countries have been in your shoes. We've bailed out the economies of Argentina, Brazil, Indonesia and South Korea. But whether our work is in Sudan, Bangladesh or now the United States, our experts are committed to intervening in national economies with care and sensitivity.

We thus want to acknowledge the progress you have made in your evolution from economic superpower to economic basket case. Normally, such a process might take 100 years or more. With your oscillation between free-market extremism and nationalization of private companies, however, you have successfully achieved, in a few short years, many of the key hallmarks of Third World economies.

Your policies of irresponsible government deregulation in critical sectors allowed you to rapidly develop an energy crisis, a housing crisis, a credit crisis and a financial market crisis, all at once, and accompanied (and partly caused) by impressive levels of corruption and speculation. Meanwhile, those of your political leaders charged with oversight were either napping or in bed with corporate lobbyists.

Take John McCain, your Republican presidential nominee, whose senior staff includes half a dozen prominent former lobbyists. As he recently put it, "I was chairman of the [Senate] Commerce Committee that oversights every part of the economy." No question about it: Your leaders' failure to notice the damage done by irresponsible deregulation was indeed an oversight of epic proportions.

Now you are facing the consequences. Income inequality has increased, as the rich have gotten windfalls while the middle class has seen incomes stagnate. Fewer and fewer of your citizens have access to affordable housing, healthcare or security in retirement. Even life expectancy has dropped. And when your economic woes went from chronic to acute, you responded -- like so many Third World states have -- with an extensive program of nationalizing private companies and assets. Your mortgage giants Fannie Mae and Freddie Mac are now state owned and controlled, and this week your reinsurance giant AIG was effectively nationalized, with the Federal Reserve Board seizing an 80% equity stake in the flailing company.

Some might deride this as socialism. But desperate times call for desperate measures.

Admittedly, your transition to Third World status is far from over, and it won't be painless. At first, for instance, you may find it hard to get used to the shantytowns that will replace the exurban sprawl of McMansions that helped fuel the real estate speculation bubble. But in time, such shantytowns will simply become part of the landscape. Similarly, as unemployment rates continue to rise, you will initially struggle to find a use for the expanding pool of angry, jobless young men. But you will gradually realize that you can recruit them to fight in a ceaseless round of armed conflicts, a solution that has been utilized by many other Third World states before you. Indeed, with your wars in Iraq and Afghanistan, you are off to an excellent start.

Perhaps this letter comes as a surprise to you, and you feel you're not fully ready to join the Third World. Don't let this feeling concern you. Though you may never have realized it, you've been preparing for this moment for years.

Commentary:

I just happened to have come across this opinion column and was actually amazed that an American would write such about there own country, even though I have seen this reference on many American’s lips these days.

Nevertheless I thought it should be shared, because of the current economic crisis meltdown. Also something of this nature concerning a country is actually rather sad, to say the least.

Something that almost escaped me to mention and the opinion columnist probably did not know, is that as far as the World Bank is concerned that the U.S. is such a poor financial risk and had alienated them so much in the past, that they know longer have any dealings with the U.S.

As to the global community, the Bush Administration has became like the naughty child no one wishes in there yard because of they way everyone has been mistreated by the current Administration; especially by U.S. President George W. Bush.

Soldier Jailed Over Iraq Murders

18 September 2008

An American soldier has been jailed and given a dishonourable discharge after pleading guilty to conspiracy to murder in the killing of four prisoners in Iraq.

Ramos told the court he stood guard as the four men were killed.

Specialist Belmor Ramos, 23, of the 1st Battalion, 18th Infantry Regiment, told a judge at his court martial that he stood guard as the men were killed.

He was sentenced to seven months' jail after working out a plea deal. He had been facing life in prison.

The victims were bound, blindfolded and shot in the head before being dumped in a Baghdad canal last year.

The four men, who were probably Sunnis, were allegedly killed in retribution for casualties in Ramos' unit.

He testified that he had agreed with the decision to kill the prisoners, and had stood watch from the machine-gun turret of his Humvee when the slayings were carried out by others.

He said he heard the shots but did not personally witness the killings.

His defence lawyer asked for his client to be formally reprimanded and remain in the Army at a reduced rank.

"I understand I should be punished, and will accept any punishment, but I humbly ask you, your honour, that you let me stay in the Army," Ramos said.

Three other soldiers in the unit have been charged with premeditated murder, conspiracy to commit premeditated murder and obstruction of justice.

They are Sergeant John E Hatley, Sergeant 1st Class Joseph P Mayo, and Sergeant Michael P Leahy Jr.

Source

McCain Had It Wrong, Protesters Claim

Flashing peace signs, a protester is lead away by a police offices as he disrupts an airport campaign rally for Republican presidential candidate Sen., John McCain, R-Ariz., and his vice presidential running mate, Alaska Gov. Sarah Palin, on 18 September 2008, in Cedar Rapids, Iowa.

The protestors claimed McCain had it wrong on Viet Nam and he has it wrong on Iraq.

A demonstrator attempts to disrupt the crowd attending the rally with Republican U.S. vice presidential Candidate Alaska Gov. Sarah Palin and Republican U.S. presidential nominee Sen. John McCain (R-AZ) at the Eastern Iowa Airport.

There was apparently, many angry protestor’s in the crowd at this gathering.
Republican U.S. vice presidential Candidate Alaska Gov. Sarah Palin (R) speaks as Republican U.S. presidential nominee Sen. John McCain (R-AZ) listens during a rally with supporters at the Eastern Iowa Airport, on 18 September 2008, in Cedar Rapids, Iowa.

Suggestion for China Tainted Milk Problem

Chinese babies are seen under treatment at a hospital in Wuhan, central China's Hubei province on September 16. One person has died in northwestern China from consuming tainted milk powder, a government website said on Thursday, the fourth death reported so far in the mounting scandal.

While I am sorry to say I am not up on the dairy situation in China, so I hope my suggestion may temporarily help those families that need to give there children milk products.

Either from cows or goats, even if there is regular condensed milk in cans, can be used to give nutrition to children, to further enrich many years ago in some countries; some mother’s use to add a certain amount of a type of liquid vitamin that was just for babies.

Nevertheless, I do think the condensed milk did have to be diluted, while I am not sure; I am thinking a doctor in China may know.

While it is greatly hoped the children in China that was especially affected by the tainted milk will be alright, I do hope my suggestion will also help the families in China who may have worries for the sake of there children.

Furthermore, from my understanding China’s milk situation has to do with packaged formula and not regular milk products.

Also we should not forget the children that may have certain types of milk allergies using this type of milk, also it comes to mind the possibility of Soy milk.

I’m writing in this manner, because of my deep concern for the children of China and with all due respect.

The Economic Writing was on the Wall

18 September 2008
by HRM Deborah

Apparently, a question was posed to both U.S. Senators running for president, if they had an idea that their economy was in trouble?

From what I heard, John McCain it was suggested had no idea, while Barack Obama said he had some idea of a problem.

While the economic writing was on the wall for about five years, I say this because this is when I personally started seeing a growing economic problem; even in my limited means, but nevertheless, I did take the time to look around.

If one was to ask me five years ago, if the U.S. was going in this direction today and that which is yet to come in the future, it was easy to say what is happening and yet to come; I will even remark while I was not trying to be mean but give a warning numerous times, even just writing on this blog for a few years.

For those economists that tries to see the light at the end of the tunnel for the next two years, they will need a minor’s hat.

Livni Wins at the Polls

Newly elected Kadima chair Tzipi Livni declares victory outside her Tel Aviv home on Thursday.

While I was assured both Kadima candidates where formable to replace current Jewish PM Ehud Olmert, I still wish to say congratulations to Tzipi Livni on her victory in the primary elections.-HRM Deborah

Anti-Iran allegations aim at misleading int'l public opinion: MP

18 September 2008

Mashhad-An Iranian MP said here Thursday that unfounded allegations raised against Iran were aimed at misleading the world public opinion about the country.

"The current situation inside the United States on the threshold of its (November) presidential elections as well as the repeated failure of President George Bush's policies in the Middle East region are the reasons behind fabricating those anti-Iran allegations," Deputy Head of Majlis National Security and Foreign Policy Commission Hossein Sobhani-Nia told IRNA.

He made the remarks commenting on the 13th "two-sided" report of Director-General of the International Atomic Energy Agency (IAEA) Mohamed ElBaradei that was presented to the agency's 35-nation Board of Governors on Monday about Iran's peaceful nuclear activities.

The MP argued that referring to issues such as not suspending uranium enrichment activities by Iran as well as using a new generation of centrifuges by the country were all aimed at misleading the world public opinion, settling down the US internal affairs and resolving Washington's problems.

Sobhani-Nia added that the UN Security Council and the IAEA were pursuing a politically-motivated approach towards Iran.

"Iran will continue its efforts to completely achieve nuclear technology for peaceful purposes by moving in line with the international regulations," stressed the MP.

He voiced Majlis support for the government over its peaceful nuclear program.

Sobhani-Nia said that Western states were for years sabotaging the efforts made by Iranian nation to act based on their absolute and peaceful nuclear rights.

The MP urged the government to continue its efforts relying on a diplomacy which is based on the principle of conducting dialogue.

Another Wall St. Shocker

Market Down Almost 450 Points After Fed Rescues Insurance Giant With $85B Takeover

17 September 2008

NEW YORK-Wall Street plunged again Wednesday as anxieties about the financial system ran high after the government's bailout of insurer American International Group Inc. and left investors with little confidence in many banking stocks. The Dow Jones industrial average lost about 450 points, giving it a shortfall of more than 800 so far this week.

As investors fled stocks, they sought the safety of hard assets and government debt, sending gold, oil and short-term Treasurys soaring.

The market was more unnerved than comforted by news that the Federal Reserve is giving a two-year, $85 billion loan to AIG in exchange for a nearly 80 percent stake in the company, which lost billions in the risky business of insuring against bond defaults. Wall Street had feared that the conglomerate, which has extensive ties to various financial services industries around the world, would follow the investment bank Lehman Brothers Holdings Inc. into bankruptcy. However, the ramifications of the world's largest insurer going under likely would have far surpassed the demise of Lehman.

Sean Egan, president of rating company Egan Jones, said AIG would have gone bankrupt if it didn't raise at least $40 billion quickly, reports CBS News business correspondent Anthony Mason.

"Trust is so important with these securities that are being handled by the major financial institutions," he told CBS News. "And that's gone right now."

"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?"

He said the anxiety gripping the markets reflects investors' concerns that AIG wasn't able to find a lifeline in the private sector and that Wall Street is now fretting about what other institutions could falter. Over the past year, companies including Lehman and AIG have sought to reassure investors that they weren't in trouble, but as market conditions have worsened the market appears distrustful of any assurances.

"No one's going to be believing anybody now because AIG said they were OK along with everybody else," Stone said.

The two independent Wall Street investment banks left standing — Goldman Sachs Group Inc. and Morgan Stanley — remain under scrutiny, as does Washington Mutual Inc., the country's largest thrift bank. Morgan Stanley revealed better-than-expected quarterly results late Tuesday and insisted that it is surviving the credit crisis that has ravaged many of its peers.

Lehman filed for bankruptcy protection on Monday, and by late Tuesday had sold its North American investment banking and trading operations to Barclays, Britain's third-largest bank, for the bargain price of $250 million. Over the weekend, Merrill Lynch & Co., the world's largest brokerage, sold itself to Bank of America Corp. in a quickly arranged plan to sidestep further slides in its stock.

"It's still uncertain ground we're treading. We just have to move on a daily basis," said Jack A. Ablin, chief investment officer at Harris Private Bank.

The Dow fell 449.36, or 4.06 percent, to 10,609.66, finishing not far off its lows of the session. On Monday, the Dow lost 504 points, the largest tumble since its drop following the September 2001 terror attacks. On Tuesday, it rose 141 points, after the Fed decided to leave interest rates unchanged.

The index is down more than 7 percent on the week, its worst showing since July 2002. The blue chips have fallen more than 25 percent since reaching a record close of 14,164.53 on Oct. 9 last year.

Broader stock indicators also fell sharply Wednesday. The Standard & Poor's 500 index dropped 57.21, or 4.71 percent, to 1,156.39, while the Nasdaq composite index fell 109.05, or 4.94 percent, to 2,098.85.

About 200 stocks rose on the New York Stock Exchange, while nearly 3,000 fell.

The stock market is likely to see heavy back-and-forth movement as traders continue to assess the flood of news that has poured in over the past several days.

Short-term Treasurys moved sharply higher as investors sought a safe place for at least the near future. There was heavy buying in T-bills, which range from three months to a year in maturities. But the yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 3.42 percent from 3.43 percent late Tuesday as longer-term debt fell.

Tom di Galoma, head of Treasurys trading at Jefferies & Co., characterized the mood of the bond market as "sheer panic." With turmoil in markets such as credit default swaps, which are essentially insurance policies against bond defaults, investors sought out alternative short-duration assets, he said.

The dollar was lower against other major currencies.

Commodities prices that have slumped in recent weeks amid growing signs of economic weakness, soared because of the appeal of hard assets.

Gold for December delivery shot up as much as $90.40, or 11.6 percent, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping $70 to settle at $850.50 in the regular session; that was its largest ever one-day gain in dollar terms.

Crude oil that had also skidded lower since midsummer $6.01 to settle at $97.16 a barrel on the Nymex after the government reported a drop in domestic crude and gas inventories. Oil dropped by about $10 a barrel on Monday and Tuesday.

The government took other measures Tuesday to help alleviate the turmoil in the markets. The Treasury said it will start selling bonds for the Fed to aid it with its lending efforts, while the Securities and Exchange Commission said it will strictly prohibit naked short-selling starting Thursday.

Short-selling occurs when traders borrow shares of a stock they expect will fall and sell them. If the stock does indeed fall, the traders buy the cheaper shares to cover the borrowed ones and profit from the difference. Naked short-selling occurs when sellers don't actually borrow the shares before selling them; it's a practice some say is partially responsible for the huge drop in the shares of investment banks like Lehman, Merrill Lynch and Bear Stearns Cos., which JPMorgan Chase & Co. bought earlier this year.

Among financial names getting hit, Goldman Sachs fell $18.51, or 14 percent, to $114.50 and Morgan Stanley fell $6.95, or 24 percent, to $21.75. AIG fell $1.70, or 45 percent, to $2.05.

Many of the investment banks are now being forced to pair up with regular banks, whose solid deposit base can provide ballast in a turbulent market.

"People are afraid of the unknown and they don't know what's on the books of these companies," said Joe Saluzzi, co-head of equity trading at Themis Trading. "The first reaction in a situation like this is to sell."

Saluzzi noted that surging gold prices and other measures of investors jitters indicate that anxiety is building.

Indeed, the Chicago Board Options Exchange's volatility index, known as the VIX, and often referred to as the "fear index," jumped nearly 15 percent to its highest close since 2002. A widely followed measure of financial stocks fell to its lowest close since mid-July.

Saluzzi is somewhat optimistic that the nervousness could be nearing a crescendo, which could squeeze out more investors and then clear the way for a snapback rally.

But the woes of the financial sector could also exacerbate problems facing other parts of the economy, given that individuals and businesses rely on the nation's money centers.

The Commerce Department reported Wednesday that home construction fell by 6.2 percent in August to 895,000 units, the slowest pace since January 1991. Slumping demand for houses, sinking home prices and mortgage defaults have been the catalysts behind Wall Street's turmoil — and the risky mortgage-backed assets held by the nation's banks are not apt to regain in value until the housing market turns around.

NYSE consolidated volume came to a very heavy 9.23 billion, little changed from Tuesday's 9.25 billion.

Overseas, Japan's Nikkei stock average rose 1.2 percent after AIG's rescue, but Hong Kong's Hang Seng index lost 3.6 percent. Britain's FTSE 100 fell 2.25 percent, Germany's DAX index fell 1.75 percent, and France's CAC-40 fell 2.14 percent.

Note:
It was reported, since the loan to AIG by the U.S. government, that the U.S. government has unlimited control on the company; which was previously thought illegal in the U.S.

Bush and Petraeus Photo Op Speech

U.S. President George W. Bush (R) speaks with former top commander in Iraq General David Petraeus (2nd-R) during a foto op speech in the Oval Office of the White House in Washington, DC, 0n 17 September 2008.

Bush and Petraeus had a photo op on the unusual panned Bush style speech/meeting session with the idea of an alleged discussion of his duties as commander of all American forces in the Middle East. Petraeus, architect of the troop surge the White House credits with improving security in war-torn Iraq, has been named to run the U.S. Central Command that oversees U.S .military operations in the region -- including the wars in Iraq and Afghanistan; which Bush created.

In his new post, which he takes over 31 October, Petraeus would manage any U.S. military operations against Iran.

Abbas Terrorists Bomb U.S. Embassy in Yemen with 16 Killed

In this photo released by Yemen News Agency (SABA) smokes raise from the US Embassy in San'a, Yemen, on 17 September 2008; after a car bomb targeting the Embassy hit the front gate of the compound.

17 September 2008

Attackers armed with automatic weapons, rocket-propelled grenades and at least one suicide car bomb assaulted the U.S. Embassy in the Yemeni capital on Wednesday. Sixteen people were killed, including six assailants, officials said.

The U.S. said no Americans were hurt.

Multiple explosions rang out outside the heavily-guarded facility, and gunfire raged for at least 10 minutes at the concrete checkpoints that ring the compound. The dead included six attackers, six Yemeni guards and four civilians, the state news agency SABA reported. Security officials said people lined up for visas were among those killed or wounded.

It was the deadliest attack on a compound that has been targeted four times in recent years by bombings, mortars and shootings.

Just last month, the State Department allowed the return of non-essential personnel and family members who had been ordered to leave after a volley of mortars targeted the embassy. The attack instead hit a girls high school next door, killing a Yemeni security guard and wounding more than a dozen girls.

In the 9:15 am attack Wednesday, gunmen in a vehicle attacked a checkpoint outside the embassy with RPGs and automatic weapons, Yemeni security officials said. During the assault, suicide bombers in a vehicle made it through the checkpoint and hit a second, inner ring of concrete blocks, and detonated, the officials said, speaking on condition of anonymity because they were not authorized to talk to the press.

SABA, citing an unidentified Interior Ministry official, reported that two suicide car bombs detonated and made no mention of a gunbattle. There was no immediate explanation for the differing accounts. A senior U.S. official in Washington said at least five detonations were heard — but embassy officials spoke of "secondary explosions," suggesting some could have been RPG blasts.

The Washington official, speaking on condition of anonymity to describe an internal Bush administration briefing, said some of the attackers were dressed as Yemeni troops, and that Yemeni emergency personnel who first rushed to the scene were hit by heavy sniper fire from gunmen who had stationed themselves across the street from the embassy.

Yemeni security officials said a group called Islamic Jihad, related to the Canaanite group of the same name which is assosiated with global terrorist Interpol fugitive Mahmoud Abbas, claimed responsibility for the attack.

The explosions hit passers-by and damaged nearby in a nearby residential compound where many Westerners live. Smoke rose from near the yellow concrete blocks that ring the embassy.

Ryan Gliha, an embassy spokesman, told The Associated Press that at least one car bomb detonated. Speaking by telephone from inside the large embassy compound, he could not immediately say if there was any damage to the facility from the blast outside.

At least seven wounded civilians, including children from nearby houses, were taken to the capital's Republican Hospital, a medical official said, speaking on condition of anonymity because he was not authorized to talk to the press.

The U.S. Embassy, in an eastern San'a district, has been targeted repeatedly — through previous attacks have been less organized. Besides the March mortar attack, a gunman opened fire outside the embassy in 2006. He was shot and arrested by Yemeni guards.

In March 2002, a Yemeni man lobbed a sound grenade into the embassy grounds a day after Vice President Dick Cheney made a stop for talks with officials at San'a airport. The attacker was sentenced to 10 years in prison but the sentence was later reduced to seven years.

In 2003, two people were fatally shot and dozens more were injured when police clashed with demonstrators trying to storm the embassy when tens of thousands rallied against the U.S.-led invasion of Iraq.

As to other claims of other alleged terrorist involvement they have not been substantiated nor are likely to do so; for this is not the first time Abbas terrorist have bombed this particular Embassy.

Update:
Later in the day, the U.S. news media reported that Al Qaeda was probably responsible for this latest bombing in Yemen, which is like saying a different hen house, with the same leading rooster; which in this case the real criminal’s has not changed, as was reported above.

To clarify, it was further felt, this was done to take the heat off Mahmoud Abbas or muddy the water which does not change the facts.

Palestine PM Haniyeh No Disrespect to Arab League

17 September 2008

by HRM Deborah

The following has to do with false statements not made by Palestine Prime Minister Ismail Haniyeh, in regards to the Arab League.

Palestine Prime Minister Ismail Haniyeh has not complained about anti-Palestinian scheme of the Arab states and certain fabricated statement’s made towards the Jewish people, which are not only false; but against the policy of the Palestine government.

As to PM Haniyeh making the remarks about “Arab League had been ready to dispatch forces to the Gaza Strip during their recent meeting," no statement is also known, but that it is not necessarily for the Arab League to dispatch any forces into any part of Palestine; out of due respect to the League that their presence is not needed.

There is also no oppression problem that is apparently claimed between the Jewish and Arab Palestinian people, but very much to the contrary. Relations between these two groups are not only pressing foreword in unity, but everything is being very good in the relations between the two religions.

Not only has there been a ceasefire since March 2008, but a full Armistice Agreement for the State of Palestine, was signed 14 March 2008, between the Palestinian and Jewish people; HRM Deborah of Palestine did the negotiations between her people and the Jewish people with all due respect towards the two parties in question, with her understanding.

The State of Palestine is doing very good since the war is over, the only problem that the whole of Palestine has, is the terrorist organization with the leadership of Mahmoud Abbas; that is in collaboration with U.S. under the Bush Administration at this time.

It is hoped this clears the air of any misunderstandings between the Palestine government and the Arab League.

Finally, as to bringing a situation such as this to the Queens attention, the parties have her gratitude.

Bolivia Calls for War with U.S.

Activists from El Alto, 12 km from La Paz, take part in an anti-US demonstration, on 15 September 2008, in La Paz.

16 September 2008

The U.S. State Department is organizing at least two evacuation flights for Americans who want to leave Bolivia amid widespread and increasing anti-American feelings.

Officials in Washington and at the U.S. Embassy in La Paz say the flights will leave Bolivia on Wednesday for neighboring Peru.

The move comes as relations between the United States and Bolivia have plummeted in the past week, with each country expelling the other's ambassador along with alleged accusations towards Bolivia by the U.S., on drug trafficking.

At this time, four countries have declared war and there are 15 preparing war on the U.S. Those at war at this time, include Venezuela, Russia, Pakistan, and now Bolivia; it has been reported.

Preparing 'Qatayef' for Ramadan

A Palestinian man prepares 'Qatayef', traditional Middle Eastern Ramadan pastry, as Jewish soldiers walk-by near the city of Hebron, on 16 September 2008.

Pakistan Declares War on U.S.

A Pakistani Shia Muslim child poses for photographers while standing on a US flag as protestors shout slogans during an anti-US protest in Islamabad, on 12 September 2008, to condemn the missile strikes in Pakistan tribal areas.

16 September 2008

Pakistan's military has ordered its forces to open fire if U.S. troops who launch another air or ground raid across or near the Afghan border or attack Pakistani civilians, it was reported.

This is said to have came after growing tensions, especially after 21 people including women and children were killed, on 8 September in a verified missile strike by U.S. drones on a Pakistan tribal town near the Afghan border.

Ghana President Visit to White House

U.S. President George W. Bush and Ghana President John Agyekum Kufuor tip their glasses in a toast during a White House State Dinner, on 15 September 2008.

What is lacking in this latest deception is that Ghana President John Kufuor doesn’t drink, while U.S. President George W. Bush drink’s like a fish deprived of water.

As to Kufuor's involvement with Bush, is they are collaborators and in doing this the country of Ghana is forcing the retirement of President Kufuor; due to the countries dislike for Bush and his foreign policies towards there country.

In other news, Bush talk’s about helping the survivors of Hurricane Ike, while the people in Louisiana and Texas or suffering just like their predecessors that suffered from natural disaster’s; to the idea of American’s and other’s more helping each other, without Bush in sight.

Aboard Marine One, US President George W. Bush flies over the devastation left along the Texas coast in the wake of Hurricane Ike, on 16 September 2008. Bush also spoke to reporters, inside a U.S. Coast Guard hangar at Ellington Field in Houston, Texas. (Updated)

Bush has always taken more of a back seat or out of sight approach to the needs of the American people, to his complementary fly by approach after the disasters.

If one expects Bush to actually do something, do not hold one’s breath; for one’s face will most assuredly turn blue due to deficiency of oxygen.

Dog makes emergency call for owner

14 September 2008

By AMANDA LEE MYERS

Man's best friend" doesn't go far enough for Buddy - a German shepherd who remembered his training and saved his owner's life by calling the emergency dispatcher when the man had a seizure.

And it's not the first time Buddy has been there for owner Joe Stalnaker, a police officer said Sunday.

On a recording of the call to the 911 emergency number Wednesday, Buddy is heard whimpering and barking after the dispatcher answers and repeatedly asks if the caller needs help.

"Hello, this is 911. Hello ... Can you hear me? Is there somebody there you can give the phone to," says the dispatcher, Chris Trott.

Police were sent to Stalnaker's home, and after about three minutes Buddy is heard barking loudly when the officers arrived.

Scottsdale police Sergeant Mark Clark said Stalnaker spent two days in a hospital and recovered from the seizure.

"It's pretty incredible," Clark said. "Even the veteran dispatchers - they haven't heard of anything like this."

Clark said police are dispatched whenever 911 is called, but that Stalnaker's address was flagged in Scottsdale's system with a notification that a trained assistance dog could call 911 when the owner was incapacitated.

Clark said Stalnaker adopted Buddy at the age of eight weeks from Michigan-based Paws with a Cause, which trains assistance dogs, and trained him to get the phone if he began to have seizure symptoms. Buddy, now 18 months old, is able to press programmed buttons until a 911 operator is on the line, Clark said.

Clark said Buddy has made two other 911 calls when Stalnaker was having seizures.

He said Stalnaker's seizures are the result of a head injury he suffered about 10 years ago during a military training exercise.

Stalnaker was not listed in the phone book, and he did not immediately respond to a request through police for an interview.

Note:
I know from personal experience, that certain dog’s because I do not know if all dog’s have this ability that they are not just useful for helping the blind, which is usually thought of; but for helping people with numerous medical conditions, especially the disabled and in Islam would be classified as a work dog.

Other Reading:
The Humane Society of the United States Expands Response to Hurricane Ike

U.S. Gas Gouging

Gas prices in some parts of the country have seen giant spikes as to the alleged claim that some owners are trying to profit off Hurricane Ike and fears of gas shortages.

by HRM Deborah

Whether it is U.S. President George W. Bush initiating a nationwide blackout or gouging the American people, it is still a crime and what makes matter‘s worse is Bush blaming other‘s for the many unacceptable moves he does behind people‘s backs.

When Hurricane Katrina occurred and gasoline shot-up over $3 dollars a gallon that was a disgrace, but after Hurricane Ike, catapulting gasoline well over $4 dollars a gallon it is just plain price gouging; as well as hampering the well-being of the all ready money-strapped American’s in a crumbling economy.

Nevertheless, with the U.S. still in flux with the numerous American’s that recently survived two hurricane’s of Gustav and Ike, something of this nature will more and likely put more injury; with further fears of displacement due to the lack of fuel with the hopes of returning home now and in the future. It also comes to mind of the many personal, needing fuel for the repair and rescue operations.

Finally, anyone doing such as these types of things or any harm to people, must have a very black heart; for their lack of compassion towards the well-being or caring of other’s. For no one should walk barefoot through human suffering.

New phase of disaster plagues Ike's survivors

Texas shelters grow crowded after nearly 2,000 rescued; death toll at 28

U.S. Air Force Pararescueman Staff Sgt. Lopaka Mounts, assigned to the 331st Air Expeditionary Group, receives a hug from a resident during search and rescue operations after Hurricane Ike in Galveston, Texas September 13, 2008. (Picture released: September 14, 2008.)

15 September 2008

GALVESTON, Texas - As teams continued the biggest search and rescue operation in Texas history, a new phase of the disaster wrought by Hurricane Ike was only beginning as thousands of people faced long stays in crowded shelters because their homes were damaged or destroyed.

The death toll from Ike rose to 28, but many of those were far to the north of the Gulf Coast as the storm slogged across the nation's midsection, leaving a trail of flooding and destruction. Glass-strewn Houston was placed under a weeklong curfew, and millions of people in the storm's path remained in the dark.

Rescuers said they had saved nearly 2,000 people from waterlogged streets and splintered houses by Sunday afternoon. Many had ignored evacuation orders and tried to ride out the storm. Now they were boarding buses for indefinite stays at shelters in San Antonio and Austin.

"I have nowhere to go," said Ldyyan Jonjocque, 61, waiting for a bus while holding the leashes of her four Australian shepherd dogs. She said she had to leave two dogs behind in her home. She wept as she told of officers rescuing her in a dump truck.

In hard-hit towns like Orange, Bridge City and Galveston, authorities continued their door-to-door search well into the night, hoping to reach an untold number of people still in their homes, many without power or supplies.

Many of those who did make it to safety boarded buses without knowing where they were going or when they could return to what might remain of their homes.

Shelters across Texas scurried to find enough cots, and some evacuees arrived with little cash and no idea of what the coming days held.

Unlivable
Even for those who still have a home to go to, Ike's 110 mph winds and battering waves left thousands in coastal areas without electricity, gas and basic communications — and officials estimated it may not be restored for a month.

"We want our citizens to stay where they are," said a weary Galveston Mayor Lyda Ann Thomas. "Do not come back to Galveston. You cannot live here at this time."

Michael Geml has braved other storms in his bayfront neighborhood in Galveston, where he's lived for 25 years, though none quite like Ike. The 51-year-old stayed in the third-story Jacuzzi of a neighbor's house, directly on the bay, with family pets as waves crashed across the landscape. But amid the havoc, Geml asked anyone who would listen — even his rescuers — for an odd commodity: cat litter for his spooked feline.

"I'll never stay again," Geml said. "I don't care what the weatherman says — a Category 1, a Category 2. I thought I was going to die."

Kathi and Paul Norton huddled inside their house in Crystal Beach until it collapsed and was swept away. Their flag pole kept the house from collapsing on top of them, buying them a few seconds to escape, holding onto the staircase.

"You never know what a hurricane is like until you ride it on a staircase," said Kathi Norton, 47. As she spoke outside the giant, warehouse-like shelter on a former Air Force base in San Antonio, busloads of new evacuees were arriving, bumper to bumper.

The hurricane also battered the heart of the U.S. oil industry as Ike destroyed at least 10 production platforms, officials said. Details about the size and production capacity of the destroyed platforms were not immediately available, but the damage was to only a fraction of the 3,800 platforms in the Gulf.

It was too soon to know how seriously it would affect oil and gas prices.

President Bush made plans to visit the area on Tuesday.

He said getting power restored is an extremely high priority and urged power companies to "please recruit out-of-state people to come and help you do this."

Storm's effects felt in Chicago, elsewhere
Ike was downgraded to a tropical depression as it moved north. Roads were closed in Kentucky because of high winds. As far north as Chicago, dozens of people in a suburb had to be evacuated by boat. Two million people were without power in Texas, Arkansas and Louisiana.

Of the 28 dead, five were in the hard-hit barrier island city of Galveston, including one body found in a vehicle submerged in floodwater at the airport. There were two other deaths in Texas and four in Louisiana, including a 16-year-old boy trapped in rising floodwaters. Several were farther inland.

Two golfers died when a tree fell on them in Tennessee. There were two deaths in Indiana; three died in Missouri. One person died in Arkansas and three in Ohio, including two motorcyclists killed when a tree toppled on them at a state park.

Ike killed more than 80 in the Caribbean before reaching the United States.

Houston, the nation's fourth-largest city, was reduced to near-paralysis in some places. But power was on in downtown office towers Sunday afternoon, and Texas Medical Center, the world's largest medical complex, was unscathed and remained open. Both places have underground power lines.

Its two airports — including George Bush Intercontinental, one of the busiest in the United States — were set to reopen Monday with limited service. But schools were closed until further notice, and the business district was shuttered.

Five people were arrested at a pawn shop north of Houston and charged with burglary in what Harris County Sheriff's spokesman Capt. John Martin described as looting, but there was no widespread spike in crime.

This photo released by the U.S. Air Force shows a UH-60 Black Hawk helicopter conducting search and rescue operations in Galveston, Texas, Saturday September 13, 2008, following the landfall of Hurricane Ike.

Nearly 2,000 rescued
Authorities said Sunday afternoon that 1,984 people had been rescued, including 394 by air. Besides people literally plucked to safety, that figure includes people met by crews as they waded through floodwaters trying to find dry ground.

Still others chose to remain in their homes along the Texas coast even after the danger of the storm had passed. There was no immediate count Sunday of how many people remained in their homes, or how many were in danger. The Red Cross reported 42,000 people were at state and Red Cross shelters Saturday night.

The search-and-rescue effort included more than 50 helicopters, and 1,500 searchers and teams from federal, state and local agencies.

From the city of Orange alone, near the Louisiana line, more than 700 people sought dry ground — "a Herculean effort to organize a reverse evacuation that nobody had ever planned for," Mayor Brown Claybar said.

Rescue crews vowed to continue the search until they had knocked on every door. They were helped by receding floodwaters, but there were constant surprises as people rowed and sloshed through towns.

'Peeling away your skin'
The storm also took a toll in Louisiana, where hundreds of homes were flooded and power outages worsened as the state struggles to recover from Hurricane Gustav, which struck over Labor Day.

In Hackberry, La., about 15 miles from the coast, workers moved a large shrimp boat out of the highway with a bulldozer, but the team had to stop because of strong currents in the floodwaters and difficulty in seeing the roadway.

Thayne Culbertson, a disabled veteran and commercial fisherman, rode out the storm at a friend's apartment in Galveston. As someone who has been through several hurricanes, he decided to stay behind for Ike in case he could help.

Instead, help had to find him. He was picked up by a helicopter after a toppled utility pole battered the building and windows were blown out. He later boarded a bus to San Antonio.

During the storm, he said, "the sand felt like it was peeling away your skin."

"Being a survivor of three hurricanes‘, which included Katrina, Rita and Gustav; my thoughts, and heart goes out to the people that went through Hurricane Ike. While I do understand the weight of this recent occurrence and why Allah (God) did this; it still makes for much sadness."-HRM Deborah

IAEA rejects alleged missing nuclear material in Iran

15 September 2008

Tehran-IAEA's spokesperson Melissa Fleming said on Sunday that all enriched uranium in Isfahan nuclear installations is under the control and supervision of IAEA and nothing is missing.

In a statement issued on Sunday, Fleming declared that Natanz nuclear power plant is under the supervision and control of IAEA inspectors. The inspectors have confirmed that there is no deviation from peaceful operations at the site.

In response to a fabricated article in the Daily Telegraph headlined 'Iran renews nuclear weapons development' by Con Coughlin and Tim Butcher, Fleming issued a statement describing the article as invalid and completely fabricated.

The IAEA statement also confirms that IAEA Chief Mohamed ElBaradei's report on Iran will show that all nuclear material at Isfahan Uranium Convention Facility remains under IAEA control and surveillance and there is no evidence of missing nuclear material from the site.

Uranium is not enriched at Isfahan as claimed by Telegraph but the fuel enrichment plant in Natanz which is under supervision of IAEA and there is no report on its deviation, Fleming said.

In its fabricated report, the daily said that by conducting a careful study of the amount of material stored at Isfahan, and the amount of 'yellow cake' known to have been processed at the plant, nuclear experts believe between 50 to 60 tons of uranium has disappeared.

IAEA's statement has been placed on its site but the western media did not report it.

Lehman rescue fails, BofA buys Merrill for $50B

15 September 2008

By JOE BEL BRUNO, CHRISTOPHER S. RUGABER and MARTIN CRUTSINGER

NEW YORK -A failed plan to rescue Lehman Brothers was followed Sunday by more seismic shocks from Wall Street, including a government-brokered takeover of Merrill Lynch by the Bank of America for $50 billion.

A forced restructuring of the world's largest insurance company, American International Group Inc., also weighed heavily on global markets as the effects of the 14-month-old credit crisis intensified.

A global consortium of banks, working with government officials in New York, announced late Sunday a $70 billion pool of funds to lend to troubled financial companies. The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.

Ten banks — Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS — each agreed to provide $7 billion "to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets."

The Federal Reserve also chipped in with more largesse in its emergency lending program for investment banks. The central bank announced late Sunday that it was broadening the types of collateral that financial institutions can use to obtain loans from the Fed.

Federal Reserve Chairman Ben Bernanke said the discussions had been aimed at identifying "potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses."

Futures pegged to the Dow Jones industrial average fell more than 300 points in electronic trading Sunday evening, pointing to a sharply lower open for the blue chip index Monday morning. Asian stock markets were also falling.

The stunning weekend developments took place as voters, who rank the economy as their top concern, prepare to elect a new president in seven weeks. It likely will spur a much greater focus by presidential candidates — Republican John McCain and Democrat Barack Obama — and members of Congress on the need for stricter financial regulation.

Samuel Hayes, finance professor emeritus at Harvard Business School, said the Bush administration may get a lot of blame for the situation, which could benefit Obama.

"Just the psychological impact of this kind of failure is going to be significant," he said. "It will color people's feelings about their well-being and the integrity of the financial system."

Lehman Brothers may be forced to seek an orderly unwinding of its businesses. All potential buyers walked away after the U.S. Treasury refused to budge on its refusal to provide any takeover aid, as it had done six months ago when Bear Stearns faltered and earlier this month when it seized Fannie Mae and Freddie Mac.

Expectations that the 158-year-old Lehman would survive dimmed after Barclays PLC withdrew its bid to buy the investment bank. Barclays and Bank of America were considered front-runners to buy Lehman, which is foundering under the weight of $60 billion in soured real estate holdings.

Employees emerging Sunday night from Lehman's headquarters near the heart of Times Square carried boxes, tote bags and duffel bags, rolling suitcases, framed artwork and spare umbrellas. Many were emblazoned with the Lehman Brothers name.

TV trucks lined Seventh Avenue opposite the building, while barricades at the building's main entrance attempted to keep workers and onlookers from gumming up the steady flow of pedestrians flowing in and out of Times Square.

Some workers had moist eyes while a few others wept and shared hugs. Most who left the building quietly declined interviews.

People snapped pictures with cameras and their phones. Observers pressed up against a police barricade drew the ire of one man who emerged from the building and shouted: "Are you enjoying watching this? You think this is funny?"

Merrill Lynch, another investment bank laid low by the crisis that was triggered by rising mortgage defaults and plunging home values in the U.S., agreed to be acquired by Bank of America for $29 a share, according to a person briefed on the deal who spoke on condition of anonymity because the agreement had not yet been finalized. That's a premium to its closing price on Friday of $17.05, but only a fraction of its price of almost $100 a share early in 2007.

Charlotte, N.C.-based Bank of America has the most deposits of any U.S. bank, while Merrill Lynch is the world's largest brokerage. A combination of the two would create a global financial giant to rival Citigroup Inc., the biggest U.S. bank in terms of assets.

Strategically, most industry analysts say it's a good fit. If the deal goes according to plan, Bank of America will be able to offer Merrill's retail brokerage services to its huge customer base. There is not a great deal of overlap between the two companies — Bank of America does have an investment bank already, but it has never been terribly strong.

Where there is duplication, however, the combination of the two companies could result in more layoffs. Both Merrill and Bank of America have already cut thousands of investment banking jobs over the past year.

The deal would not come without risks, however. Merrill Lynch, like many of its Wall Street peers, has been struggling with tight credit markets and billions of dollars in assets tied to mortgages that have plunged in value. Merrill has reported four straight quarterly losses.

And Bank of America's own finances are far from robust. As consumer credit deteriorates, the bank has seen its profits decline, and the company is still in the midst of absorbing the embattled mortgage lender Countrywide Financial, which it acquired in January.

Insurer AIG, hit hard by deterioration in the credit markets, said Sunday it is reviewing its operations and discussing possible options with outside parties to improve its business after a week when its stock dropped 45 percent amid concerns about the company's financial underpinnings. It was working with New York Insurance Superintendent Eric Dinallo and a representative of the governor's office through the weekend to craft a solution that protects policyholders, according to Dinallo's spokesman David Neustadt.

Treasury Secretary Hank Paulson was huddled through the weekend at the New York Federal Reserve's fortress-like building in downtown Manhattan with executives from major banks and investment houses to hash out the fate of Lehman Brothers and to staunch the bleeding on Wall Street that threatened to shatter investor confidence around the globe.

"It's clear we're one step away from a financial meltdown," said Nouriel Roubini, chairman of the consulting firm RGE Monitor.

The meetings that began Friday night were a who's who of financial heavyweights: Paulson, Timothy Geithner, president of the New York Fed, Securities and Exchange Commission Chairman Christopher Cox, and a host of CEOs, including Vikram Pandit of Citigroup Inc., Jamie Dimon of JPMorgan Chase & Co., John Mack of Morgan Stanley, Lloyd Blankfein of Goldman Sachs Group Inc., and Merrill Lynch & Co.'s John Thain.

For all their efforts, Lehman appeared ready to file for bankruptcy.

The end of Lehman may not stop the financial crisis that has gripped Wall Street for months, analysts said. More investment banks could disappear soon.

The independent broker-dealers "are going the way of the dodo bird," said Bert Ely, an Alexandria, Va.-based banking consultant.

That's partly because some of the firms, particularly Merrill, made bad bets on real estate. But several analysts said that investment companies will need the deep pockets of commercial banks to survive the next few years.

Roubini said with no deal for Lehman, Merrill and the other investment firms would have been hit with a "run on the bank," as hedge funds and other clients withdraw funds and banks become reluctant to lend to them. Many of the investment banks rely on short-term loans to finance their day-to-day operations.

The cost of insuring financial firms' debt from default has been soaring.

A rise in the cost of the insurance, known as credit default swaps, indicates debt holders believe there is a greater chance of default by the financial companies. Especially over the past week, those insurance costs have been increasing rapidly as more debt holders fear companies like Lehman Brothers and Washington Mutual Inc. could collapse and not be able to repay their debt.

Swaps on most financial firms are likely to get even worse during the upcoming week, analysts said.

On Sunday, there was also an emergency trading session being held at the International Swaps and Derivatives Association to "reduce risk associated with a potential Lehman Brothers Holdings Inc. bankruptcy." The ISDA, which arranges trades for derivatives, said it was allowing customers to make trades and unwind positions linked to Lehman — but that those trades would be

Roubini said it's difficult to accurately gauge the health of companies like Merrill because their financial health depends on how they value complex securities. As a result, their finances aren't very transparent, he said.

That can lead to a loss of confidence in the financial markets, he said, which can overwhelm an investment bank even if it is financially healthy by some measures.

"Once you lose confidence, the fundamentals matter less," he said.

Ely said similar shake-outs have happened in other parts of the financial industry, such as credit cards and thrifts. Bank of America acquired independent credit card issuer MBNA in 2005, for example, while credit card company Capital One Financial Corp. has diversified itself by purchasing regional banks in Louisiana, Texas and New York.

The common denominator of the financial crisis, analysts said, is the bursting of the housing bubble. Home prices have dropped on average 25 percent so far. Roubini predicted they could drop another 15 percent.

The crisis has begun to slow the broader economy as banks make fewer loans and consumers have begun cutting spending. Many economists are now forecasting that the economy could slip into recession by the end of this year and early next year.

That, in turn, could cause additional losses for commercial banks on credit cards, auto loans and student loans.

The Fed is widely expected to keep interest rates steady at 2 percent, below inflation, when it meets Tuesday. It was possible, however, that the central bank might decide in coming weeks to cut rates if such a move is seen as needed to calm turbulent financial markets.

The International Monetary Fund predicted earlier this year that total losses from the credit crisis could reach almost $1 trillion. So far, banks have only taken about $350 billion in losses.

Commercial banks are also starting to feel the pinch. Eleven have closed so far this year, including Pasadena, Calif.-based IndyMac Bank, which had $32 billion in assets and $19 billion in deposits.

Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets.

Individual customers are starting to get nervous about the financial health of their banks for the first time in generations, he said. Whalen's firm analyzes the safety and soundness of banks for business clients, but began receiving inquiries from individuals in the past two months for the first time, he said.

"If we don't get ahead of this, we are going to face a run on the retail banks by election day," he said.

Further Reading:

Stocks stumble amid new Wall Street landscape