Global Correction

[lannarebirth]

dumb, dumb, dumb

http://www.marketwatch.com/News/Story/Stor...amp;siteid=mktw

Yes & just heard that on CNBC & also some here...(sorry did not get the name & not sure if was company or fund)

Has stopped loaning out shares to effectively stopping shorting

It opens the door for an '87 type event. It's been a pretty orderly markdown till now, but if you get rid of shorts you lose a lot of liquidity. Not to mention buyers at the bottom.

[LaoPo]

It's all in the game...-possible- shifting of Powers***....VegasVic's nightmare...

Morgan Stanley Said to Be in Talks With China's CIC

Sept. 18 (Bloomberg) -- Morgan Stanley, the second-biggest independent U.S. securities firm, may sell a larger stake to China Investment Corp. and is in talks about a possible merger with Wachovia Corp., a person familiar with the matter said.

China's state-controlled fund may buy as much as 49 percent of the New York-based investment bank, said the person, who declined to be identified because the talks aren't public and may end in no agreement. Morgan Stanley resumed its decline on the New York Stock Exchange, falling as much as 22 percent.

Morgan Stanley, led by Chief Executive Officer John Mack, and Goldman Sachs Group Inc., the biggest U.S. securities firm, tumbled the most ever yesterday as the deepening credit crunch fueled concern their funding sources are drying up. Morgan Stanley shares plunged 42 percent this week through yesterday after Lehman Brothers Holdings Inc. filed for bankruptcy and Merrill Lynch & Co. sold itself to Bank of America Corp.

``Morgan Stanley must be talking to any suitor,'' said Roger Lister, a credit analyst at the DBRS Inc. rating firm in New York. ``But I'm not sure whether a merger with a bank will solve the problems. It's not a deposit-base issue but a crisis of confidence. And getting a capital infusion from the Chinese or somebody else brings huge dilution due to the depressed stock price, which scares investors even more.''

Morgan Stanley fell $4.32, or 20 percent, to $17.43 in New York Stock Exchange composite trading at 11:57 a.m. Wachovia rose 11.3 percent to $10.15.

Gao Xiqing in U.S.

China Investment Corp. bought a 9.9 percent stake in Morgan Stanley in December after the firm reported a quarterly loss. CIC's president, Gao Xiqing, is in the U.S. with Wei Christianson, who runs Morgan Stanley's business in China, the Financial Times reported today.

If Morgan Stanley ``could come out and say we're raising this slug of capital to stabilize our balance sheet and operate at a lower level of leverage going forward, that would help,'' said Ben Wallace, a securities analyst at Grimes & Co. in Westborough, Massachusetts, which manages $850 million. ``They're so levered that they need to have the confidence of the market, and they don't have that right now.''

Mack, 63, addressed employees this morning in a crowded meeting in New York, saying the firm's earnings and balance sheet were sound, according to people who attended or watched the firm- wide video broadcast. He said Morgan Stanley was in stronger shape than Lehman or Bear Stearns Co., which was forced to sell itself to JPMorgan Chase & Cos. earlier this year.

Talk With Pandit

Two of the attendees, who declined to be named because they weren't authorized to speak to the press, said Mack sounded upbeat and confident.

Mark Lake, a spokesman at Morgan Stanley in New York, declined to comment.

Mack tried unsuccessfully earlier this week to persuade Vikram Pandit, CEO of Citigroup Inc., to combine their two companies, the New York Times reported today, citing people briefed on the talks. A Citigroup spokeswoman, Christina Pretto, said comments the Times attributed to Mack were ``never stated.''

Mack got a call from Wachovia yesterday indicating interest, said a person with knowledge of the matter. Talks about a deal with Wachovia have ``advanced,'' CNBC reported today. A merger with Wachovia could involve dividing the assets of both companies into two separate entities, a ``good bank'' and a ``bad bank,'' the Wall Street Journal reported, citing an unidentified person familiar with the matter.

Wachovia Costs

``The smartest people at this firm are focused on solutions,'' Lake, the Morgan Stanley spokesman, said yesterday.

Wachovia spokeswoman Christy Phillips-Brown said it was bank policy not to comment on ``market rumors or merger speculation.''

Wachovia, the fourth-largest U.S. bank, plunged 21 percent yesterday after saying it would support $494 million of Lehman credits held by its Evergreen Investments money market funds. The lender, based in Charlotte, North Carolina, had a market value of $19.7 billion yesterday, 18 percent less than Morgan Stanley's $24.1 billion.

Wachovia Chief Executive Officer Robert Steel, hired in July to replace Kennedy Thompson, is cutting $1.5 billion of expenses and reducing risk to cope with mounting losses from Wachovia's $122 billion of option adjustable-rate mortgages.

Merrill analyst Guy Moszkowski called a deal with Wachovia ``unlikely'' and said in a note today that a combination with Wachovia would ``saddle Morgan Stanley with considerable credit risk.''

``It is difficult for us to perceive a strategic benefit for Morgan Stanley, which would be merging with the weakest of the five major U.S. banks,'' Moszkowski wrote.

Short Sellers

Morgan Stanley and Goldman have defended their business model, saying they have adequate capital and don't need the deposit funding that banks have. Mack lambasted short sellers for pushing his firm's shares lower.

In a memo to employees yesterday, Mack said the management committee is ``taking every step possible to stop this irresponsible action in the market,'' and he urged employees to contact clients to reassure them that the firm is performing strongly and has plenty of capital.

``There is no rational basis for the movements in our stock or credit-default spreads,'' Mack wrote in the memo. ``We're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down.''

The U.S. Securities and Exchange Commission may require hedge funds to disclose their short-sale positions and plans to subpoena the funds for their communication records, Chairman Christopher Cox said in a statement late yesterday.

Default Swaps

Short sellers try to profit by betting stock prices will fall. In a short sale, traders borrow shares from their broker that they then sell. If the price drops, they buy back the stock, return it to their broker and pocket the difference.

Credit-default swaps on Morgan Stanley rose to 900 basis points after falling earlier to 870 basis points, according to broker Phoenix Partners Group. Contracts on Charlotte, North Carolina-based Wachovia, the fourth-largest U.S. bank, rose to 695 basis points after falling to as low as 685 basis points. They are down from 747 basis points yesterday, CMA data show.

Credit-default swaps are financial instruments based on bonds and loans used to speculate on a company's ability to repay debt or to hedge against losses. The value of the contracts increases when investor sentiment deteriorates and the cost of protection rises.

Morgan Stanley's plunge may add impetus to calls from Democrats in Congress for a broader effort by policy makers to address the financial crisis, including setting up a government agency to take on devalued assets.

`Unscrew It'

``The private market screwed itself up and they need the government to come and help them unscrew it,'' House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, told reporters late yesterday after top lawmakers met with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke.

Frank this week proposed considering an agency to ``deal with all the bad paper out there'' and get financial markets ``out of the box'' they are in.

--Bloomberg

*** to be expected, of course.

It's the period for very wealthy state-owned and semi state-owned investors like Saudi Arabia, Dubai, Abu Dhabi, Kuwait, China, Russia, Singapore etc. who are able to make overnight decisions about buying (now cheap) stock and investments a lot faster than democratic countries and companies. That's not a very good development of course.

However, the Western countries, with the US in the lead can only blame themselves for the present situation...

IF other countries and/or companies would NOT step in, the situation would worsen even further.

It's all about money and shifting of Powers but it's happening a lot faster than the Americans/Western World would have thought it would.

LaoPo

[LaoPo]

The worst is yet to come

'No market for old men,' TCW investment strategist warns in gloomy forecast

By Jonathan Burton, MarketWatch

Last update: 9:34 p.m. EDT Sept. 17, 2008

SAN FRANCISCO (MarketWatch) -- An influential investment strategist has a dire forecast for U.S. stocks, credit markets and the continued independence of some of the nation's top financial institutions.

Jeffrey Gundlach, chief investment officer at Los Angeles-based mutual-fund company TCW Group Inc., told clients on a conference call late Wednesday that the crisis in credit and housing may not abate for several years and is actually getting worse.

Continues here:

http://www.marketwatch.com/news/story/wors...printMidSection

--Marketwatch/THE WALL STREET JOURNAL

LaoPo

[bingobongo]

well, 10,700 on the DOW was broken today (Sept 17) and if it doesn't rebound and get back over 10,700 quickly, next leg is down as there is no support until 10,300

strap in

well, there is the hard bounce back over 10,700 I mentioned, due primarily to short covering in response to Paulson's mention of facility for bad debts.......lets see if it holds, 10,700 is still the line that needs to be held or down she goes to 10,300

DOW,

410.03

+3.86%

11,019.69

Edited September 18, 2008 by bingobongo

[flying]

:D

[jcon]

It's funny but sad at the same time because it's so true... except there are many more boats filled with many other big-shots

So let's get this straight: For Americans, you:

1. earn money

2. pay tax

3. invest what's left

4. get raped on that from bigger fish

5. get raped again when friends of big fish bail out other big fish

6. pay taxes for the said raping

7. die and have whatever's left be taxed yet again

8. ad infinitum

all under the guise of "capitalism." Pure genius for those at the top, for everybody else, SOL.

Sweet deal.... America.... Give me your tired, your poor, your huddled masses yearning to breathe free, and we will rape you.

I refuse to pay any more taxes. Come and find me taxman!!!!

[flying]

It's funny but sad at the same time because it's so true... except there are many more boats filled with many other big-shots

So let's get this straight: For Americans, you:

7. die and have whatever's left be taxed yet again

I refuse to pay any more taxes. Come and find me taxman!!!!

Too True

They say 1st your born then you suffer then you die.

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

[jcon]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

[glyph]

"Wasn't America founded by folks sick of paying taxes?"

Nope. It was founded by those who refused to pay taxes without representation. A little history for you: as English colonies, they were forced to pay taxes to the King of England, but they had no representation in English courts. The breaking point was paying a tax on English tea. The US constitution provides for representation in both houses of Congress (one based on a state's population, one based on two reps per state). Too, the US constitution provides for the "redress of grievances", through the Judicial system.

[lordofdelusion]

'No market for old men,' TCW investment strategist warns in gloomy forecast

That would include most of us I think.

I fled some time ago because a 400 point up followed by a 400 point down in 24 hours just doesn't make sense to me. And how many times over the last 6 months have seen those kind of swings? I just couldn't take it anymore. I'm stuck in low interest cash instruments but now I'm hearing even those may not be safe. Thai banks have no deposit protection. So where in the world, and in what currency, are the wise ones putting their money? I throw up my hands!! (and breakfast ) What is there to do???

[flying]

'No market for old men,' TCW investment strategist warns in gloomy forecast

That would include most of us I think.

I fled some time ago because a 400 point up followed by a 400 point down in 24 hours just doesn't make sense to me.

That is how I felt back in 2000 when the Nas was coming off that crazy run to almost 5k

I kept thinking I could make money & boy some days I did.

Only to lose it all back the next.

I decided it was so much like gambling I gave it up Stocks I mean I still went to vegas many times a year.........LOL

But I have stopped that too for quite some time now

As for your other question I still feel ok with banks that have a high rating.

http://www.bankrate.com/brm/safesound/ss_home.asp

Of course 100k or less just in case

[lannarebirth]

'No market for old men,' TCW investment strategist warns in gloomy forecast

That would include most of us I think.

I fled some time ago because a 400 point up followed by a 400 point down in 24 hours just doesn't make sense to me. And how many times over the last 6 months have seen those kind of swings? I just couldn't take it anymore. I'm stuck in low interest cash instruments but now I'm hearing even those may not be safe. Thai banks have no deposit protection. So where in the world, and in what currency, are the wise ones putting their money? I throw up my hands!! (and breakfast ) What is there to do???

One has to know how Wall Street operates to understand it. Wall street operates for it's own benefit. Your stock doesn't go up or down because someone finally recognizes its value or it's overpriced, it moves because someone can move it. That is done mostly through the use of derivative instruments. Lotta derivatives set to tumble today:

http://www.investopedia.com/terms/q/quadruplewitching.asp

Don't try to understand it in rational terms. The best way to understand it is from the POV of a con man sizing up a mark. Today was a criminal self-preservation day.

[lannarebirth]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

I understand your point, but if one has to pay taxes, I'd rather it went toward providing healthcare and quality education than bailing out ignorant homebuyers, delusional investors, and fiduciary criminals.

[LaoPo]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

I understand your point, but if one has to pay taxes, I'd rather it went toward providing healthcare and quality education than bailing out ignorant homebuyers, delusional investors, and fiduciary criminals.

...right......butn the most powerful nation on earth has some 50 MILLION people...without healthcare. It's a bloody shame.

LaoPo

[lannarebirth]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

I understand your point, but if one has to pay taxes, I'd rather it went toward providing healthcare and quality education than bailing out ignorant homebuyers, delusional investors, and fiduciary criminals.

...right......butn the most powerful nation on earth has some 50 MILLION people...without healthcare. It's a bloody shame.

LaoPo

Said the man from the land of the 50 year old busboys.

[LaoPo]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

I understand your point, but if one has to pay taxes, I'd rather it went toward providing healthcare and quality education than bailing out ignorant homebuyers, delusional investors, and fiduciary criminals.

...right......butn the most powerful nation on earth has some 50 MILLION people...without healthcare. It's a bloody shame.

LaoPo

Said the man from the land of the 50 year old busboys.

I'm afraid I miss this one LR......please educate an old man....the only thing I see around in this land is windmills, the famous national coffeeshops-with-a-menu-without-coffee-but-just-grass-and-other-smokey-stuff, red-light-district-with-girls-behind-windows, cheese and tulips...........

LaoPo

[lordofdelusion]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

I understand your point, but if one has to pay taxes, I'd rather it went toward providing healthcare and quality education than bailing out ignorant homebuyers, delusional investors, and fiduciary criminals.

Here here!!!! I fully agree. But the rich protect the rich. Money=power at home and abroad.(see Thai politics)

Interesting reports on the tele now regarding this whole mess. More and more are coming into the camp of a major worldwide screw-up that will fundamentally change the financial markets. Interesting times. I think it's time for hard assets. Home and some land. As my wife pointed out, her family of 9 survived on much less as do so many in the world. We will survive with our assets.

[jcon]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

I understand your point, but if one has to pay taxes, I'd rather it went toward providing healthcare and quality education than bailing out ignorant homebuyers, delusional investors, and fiduciary criminals.

I agree completely.... That social structure works in dare I say more "civilized" societies i.e. Sweden. But it starts with the cultural concept which the Swedes refer to as "lagom" which is what they say when you ask how much food they want, how much whatever they want... it doesn't have an exact english translation... but something like "just enough" -- but the meaning is more than "just enough" -- there is an implication that more than that is for lack of better word, garish.

So the country doesn't have a totally capitalistic society where greed rules, it's kind of a social harmony where "just enough" is enough and to have more is actually kind of seen as not the best thing... To illustrate the point, in many parts of Sweden, if you pull up in your Merc s65 AMG with 22" wheels, the reaction is kind of negative more than the "whoa, that dude's a pimp" reaction you'd get in the States...

I've done Sweden and Scandinavia a disservice by over-simplifying their cultures to make a point. Sorry for that. But the fact remains that the Scandinavian countries rule pretty much all indicators of total overall social welfare/happiness, etc. There has to be a reason for this.

As the US has developed under the guise of "super-capitalism," what has resulted is a "to each his own" attitude, leaving massive populations who become marginalized (i.e. the 1/5+ of Americans without Healthcare coverage). Education sucks, the list goes on of the indicators of social cohesion and strengh that is lacking to have a truly developed country.

Did I just semi-rant? Sorry. I'm just sick of paying taxes in the US and not seeing any social benefit... the point of tax isn't to bailout greedy men and their institutions. That pisses me off. In this regard the US isn't so much different from Thailand... a pretty serious allegation, but it's becoming more clear day by day.... year by year... I guess that's why we're expats, eh?

[lannarebirth]

Did I just semi-rant? Sorry. I'm just sick of paying taxes in the US and not seeing any social benefit... the point of tax isn't to bailout greedy men and their institutions. That pisses me off. In this regard the US isn't so much different from Thailand... a pretty serious allegation, but it's becoming more clear day by day.... year by year... I guess that's why we're expats, eh?

I don't blame the greedy men so much, I blame the populace. A snake is a snake, and if you pet him and he bites you, whose fault is that? It is the greed and delusion of the citizenry that is the problem. Most foreigners get this point wrong saying they've met many americans they like, but they can't abide what the country does. The country only does what is necessary to feed the money/blood lust of the citizenry. America is a great country, which at this time in history is populated by some of the most ignorant people on the face of the earth.

[jcon]

Did I just semi-rant? Sorry. I'm just sick of paying taxes in the US and not seeing any social benefit... the point of tax isn't to bailout greedy men and their institutions. That pisses me off. In this regard the US isn't so much different from Thailand... a pretty serious allegation, but it's becoming more clear day by day.... year by year... I guess that's why we're expats, eh?

I don't blame the greedy men so much, I blame the populace. A snake is a snake, and if you pet him and he bites you, whose fault is that? It is the greed and delusion of the citizenry that is the problem. Most foreigners get this point wrong saying they've met many americans they like, but they can't abide what the country does. The country only does what is necessary to feed the money/blood lust of the citizenry. America is a great country, which at this time in history is populated by some of the most ignorant people on the face of the earth.

Good point. I agree and I offer an alternative viewpoint akin to a vicious-circle of greed: greed of the institutions (i guess we're referring to them as "greedy men" for the purpose of this discussion) fuels greed in the populace, which fuels greed in the institutions, ad infinitum until the whole thing collapses.

I totally agree with your last sentence. Let it be said that I am American lest I be accused of America-bashing. Just stating what I'm seeing...

[jcon]

uhhh.... wow, markets are craaazzzyyy.... UK banks OMG!

close positions today? let it ride?

any bets on monday?

[LaoPo]

uhhh.... wow, markets are craaazzzyyy.... UK banks OMG!

close positions today? let it ride?

any bets on monday?

The US is working on a MEGA PLAN to restore confidence and turn around the financial crisis and it seems it will work. Will cost hundreds of Billions of $'s but if not, it will cost a lot more.

Paulson and Bernanke were just seen on Television, also in Europe. ALL EU markets are UP wit percentages varying from 3% - 4 - 5 and 6 and even 14% in Ireland and there is a lot of faith in the markets.

Moscow also opened again after being closed for days and is UP between 17-20%

All-in-all a positive turn.

Edit:

It seems the plan (details unknown as of yet) will say that Banks will be able to 'deliver' their bad loans to the Central Bank who will create a special super fund for those loans.

If that includes bad Bank loans from/to other countries...? not know yet.

LaoPo

Edited September 19, 2008 by LaoPo

[lannarebirth]

The good news is, I'm sure their working on a plan to make shorting the $USD illegal too.

[lannarebirth]

uhhh.... wow, markets are craaazzzyyy.... UK banks OMG!

close positions today? let it ride?

any bets on monday?

Usually, when markets are manipulated, I tell people don't be idealogues and get on the side of the manipulators. In this instance though, I'm just going to stand aside for awhile.

[lannarebirth]

The funny thing is..............Wasn't America founded by folks sick of paying taxes?

That's the sick irony!!!

Actually I'd say it's even worse now, as post coffee-dumping, there was some sort of representation (... no taxation without representation).... who represent's the taxpayer's now?

I understand your point, but if one has to pay taxes, I'd rather it went toward providing healthcare and quality education than bailing out ignorant homebuyers, delusional investors, and fiduciary criminals.

...right......butn the most powerful nation on earth has some 50 MILLION people...without healthcare. It's a bloody shame.

LaoPo

Said the man from the land of the 50 year old busboys.

I'm afraid I miss this one LR......please educate an old man....the only thing I see around in this land is windmills, the famous national coffeeshops-with-a-menu-without-coffee-but-just-grass-and-other-smokey-stuff, red-light-district-with-girls-behind-windows, cheese and tulips...........

LaoPo

It's the thing you don't see that matters, and that's opportunity. The only things I think about whenever that land is mentioned, is the slave trade and the massacre at Srebrenicza.

[LaoPo]

The good news is, I'm sure their working on a plan to make shorting the $USD illegal too.

The forbidding of SHORTING is proof that investing is not 'free and democratic' anymore. It's regulated in times of emergency an it's absurd they are telling investors WHAT to do and what NOT to do....but LONG is not forbidden.....absurd.

Also absurd is that -in the end- the taxpayer has to pay for the GIGANTIC mistakes and IDIOTIC products the financial whizzkids and criminals created.

The constant bashing to other countries, by the US, that those countries were supporting their own industries is also no longer funded. The USA are now THE example how to save and support their own -financial- industry with hundreds of Billions of $'s...

They are in fact REWARDING the criminals with tax payer's money

What a world.

LaoPo

[LaoPo]

* SEPTEMBER 19, 2008

U.S. Drafts Sweeping Plan to Fight Crisis As Turmoil Worsens in Credit Markets

Paulson Briefs Congress on Idea to Buy Bad Assets From Banks, Insure Money-Market Funds; Stocks Rebound Sharply

WASHINGTON -- The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues.

At the center of the potential plan is a mechanism that would take bad assets off the balance sheets of financial companies, said people familiar with the matter, a device that echoes similar moves taken in past financial crises. The size of the entity could reach hundreds of billions of dollars, one person said.

[Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, Securities and Exchange Commission Chairman Christopher Cox and Senate Banking Committee Chairman Sen. Chris Dodd join other leaders from the House and Senate for a meeting at the U.S. Capitol September 18, 2008 in Washington, DC.] Getty Images

Bernanke, Paulson, Cox and Senate Banking Committee chair Dodd join other leaders from the House and Senate for a meeting at the U.S. Capitol.

Another proposal would be the creation of federal insurance for investors in money-market mutual funds, coverage akin to the insurance that currently safeguards bank deposits. The move is designed to stem an outflow of funds as consumers start to worry about even the safest of investments, a sign of how the crisis is spreading to Main Street. There is $3.4 trillion in money-market funds outstanding.

In addition, the Securities and Exchange Commission is set to propose a temporary ban on short-selling. It's not clear how broadly the ban might extend, but it could apply only to financial stocks.

Details of the plan were still being worked out Thursday night and could be delivered to Congress in "hours," said Senate Majority Leader Harry Reid of Nevada.

The administration had been taking a patchwork approach to the financial crisis, putting out fires as they ignited. The new moves represent an effort to take a more systematic approach, after a spiral of bad debts, credit downgrades and tumbling stocks brought down venerable names from investment bank Lehman Brothers Holdings Inc. to insurance giant American International Group Inc. Banks have grown unwilling to lend to one another, a sign of extreme stress, because financial markets work only when institutions have faith in each other's ability to meet their obligations.

Word of the plan came the same day as the Federal Reserve and other major central banks offered hundreds of billions of dollars in loans to commercial banks to alleviate a deepening freeze in the world's credit markets. That step appeared to have moderate impact on lending among banks. Meanwhile, a wave of redemptions continued hitting money-market funds, causing a second large fund to shut to investors.

[betting Against]

In Russia, officials suspended stock-market trading for the second-straight day as the Russian government promised to inject $20 billion to halt a collapse in share prices. In China, government officials directed purchases of bank shares and encouraged companies to buy their own shares in efforts to prop up a falling market.

Still, word of a possible U.S. plan to address the crisis sent the stock market soaring, in one of its sharpest reversals in recent memory. The Dow Jones Industrial Average ended up 3.9%, the index's biggest percentage gain in nearly six years, on record New York Stock Exchange volume. The blue-chip index finished more than 560 points above its intraday low and reclaimed about 90% of its Wednesday losses. Nasdaq composite trading also saw trading volume set a new single-day high at 3.89 billion shares.

All 30 Dow component stocks closed higher, but financial companies were the biggest winners, racking up double-digit percentage gains after weeks of selling off.

The flurry of moves under discussion may bring the markets some breathing room, but it isn't clear whether they will amount to a long-term solution to the complex financial problems sweeping the market.

"The market wants to see a more systemic solution that doesn't leave us wondering day after day about the next institution that's the weakest link in the chain," said former Fed Board member Laurence Meyer, vice chairman of Macroeconomic Advisers, an economic research firm.

[bailout Brigade]

Treasury Department officials have studied a structure to buy up distressed assets for weeks, but have been reluctant to ask Congress for such authority unless they were certain it could get approved. The intensified market turmoil may have changed that political calculus, even with less than two months left until the November elections.

A big question still to be answered is how the government will value the assets it takes onto its books. One possible avenue could be some sort of auction facility, so that the government would not have to be involved in negotiating asset values with companies. Financial companies would likely take big losses.

President George W. Bush met with Treasury Secretary Henry Paulson, Securities and Exchange Commission Chairman Christopher Cox and Federal Reserve Chairman Ben Bernanke for 45 minutes Thursday to discuss "the serious conditions in our financial markets," said White House spokesman Tony Fratto.

Messrs. Paulson, Cox and Bernanke later addressed Congressional leaders Thursday evening on their proposals. At the meeting, Mr. Bernanke began by laying out the severity of the crisis. Mr. Paulson "made the sale," said a top congressional aide.

House Financial Services Committee Chairman Barney Frank, the Massachusetts Democrat, said his panel could hold a vote on the package as soon as Wednesday.

"They said they would like legislation to do it, and there was virtually unanimous agreement that there would be legislation to do it," said Mr. Frank.

In a news conference after the meeting, Mr. Paulson described his effort as "an approach to deal with the systemic risk and the stresses in our capital markets." The "comprehensive" solution would deal with the souring real-estate and other illiquid assets at the heart of the financial crisis, he said.

Exactly how such an entity might be structured isn't yet clear. The possible plan isn't expected to mirror the Resolution Trust Corp., which was used from 1989 to 1995 during the savings and loan crisis to hold and sell off the assets of failed banks. Rather, a new entity might purchase assets at a steep discount from solvent financial institutions and eventually sell them back into the market.

[President George W. Bush arrives to make a statement regarding the economy in the Oval Office Colonnade at the White House Thursday.] European Pressphoto Agency

President George W. Bush arrives to make a statement regarding the economy in the Oval Office Colonnade at the White House Thursday.

The program may look more like the Reconstruction Finance Corporation, a Depression-era relief program formed in 1932 by President Hoover that tried to inject liquidity into the market by giving loans to banks and other businesses.

According to a top congressional aide, the Treasury department wants authority to either control the program or have it be a separate division of the government.

A series of veteran policy makers, including former Treasury Secretary Lawrence Summers and former Fed Chief Paul Volcker, has pushed in recent weeks for such a government agency that would attempt a comprehensive solution to the markets crisis.

The idea would be to steady the market so that investors regain confidence in financial institutions and resume conducting business normally with them.

"By stepping in here and getting the markets to function again, the government could deliver the Sunday punch to this financial turmoil," said former Comptroller of the Currency Eugene Ludwig, who is now chief executive of Promontory Financial Group, and a big proponent for the idea. "By taking the first step and making a market the new government entity could take fear out of marketplace," he added.

Thursday, Republican nominee Sen. John McCain sought a broad expansion of government regulation over financial institutions, including the formation of a body to both assume distressed mortgages and help failing investment banks.

Saying the government cannot "wait until the system fails," Sen. McCain called for the creation of an entity that would essentially help companies sell off bad loans and other impaired assets. It is unclear how the body, dubbed the Mortgage and Financial Institutions trust, would operate, including whether or not institutions would seek help or whether the government would intervene on its own behalf.

His rival, Democratic Sen. Barack Obama of Illinois was less specific about what steps he would take, offering broader outlines of policy proposals that included a "Homeowner and Financial Support Act." The measure, which would inject capital and liquidity in the financial system, is designed to provide a more coordinated response than "the daily improvisations that have characterized policy-making over the last year."

---THE WALL STREET JOURNAL

LaoPo

[lannarebirth]

The good news is, I'm sure their working on a plan to make shorting the $USD illegal too.

The forbidding of SHORTING is proof that investing is not 'free and democratic' anymore. It's regulated in times of emergency an it's absurd they are telling investors WHAT to do and what NOT to do....but LONG is not forbidden.....absurd.

Also absurd is that -in the end- the taxpayer has to pay for the GIGANTIC mistakes and IDIOTIC products the financial whizzkids and criminals created.

The constant bashing to other countries, by the US, that those countries were supporting their own industries is also no longer funded. The USA are now THE example how to save and support their own -financial- industry with hundreds of Billions of $'s...

They are in fact REWARDING the criminals with tax payer's money

What a world.

LaoPo

It's just plain dumb. Short side players are by far the most knowledgable of market traders. If they're wrong they stand to have untold losses. Consequently, they do a heck of a lot more research on the targets of their short campaigns. Long only players should get on their knees and thank them for bringing to light the cancerous elements in the market. Instead they just pray someone will make their stocks go back up. "War, suspension of liberties, whatever, just please make my stocks go back up".

[lannarebirth]

Chart to watch:

http://stockcharts.com/h-sc/ui?s=$VIX...&a=77311902

Did you see how China ended today ? It went down -7.19% (Shanghai composite).

LaoPo

I think if it gets back to 1,800 , one has to buy it.

agree...but that was Oct 2006; it's 4,400 now.

Maybe it could go as low as 2000 to 2200 but not much lower than that. That's another 50% down from today; we'll see.

IF it goes down like that the world is already in a serious recession and all stock markets will be down with lots of opportunities.

LaoPo

Not too bad. 15% move from 1802:

[LaoPo]

The good news is, I'm sure their working on a plan to make shorting the $USD illegal too.

The forbidding of SHORTING is proof that investing is not 'free and democratic' anymore. It's regulated in times of emergency an it's absurd they are telling investors WHAT to do and what NOT to do....but LONG is not forbidden.....absurd.

Also absurd is that -in the end- the taxpayer has to pay for the GIGANTIC mistakes and IDIOTIC products the financial whizzkids and criminals created.

The constant bashing to other countries, by the US, that those countries were supporting their own industries is also no longer funded. The USA are now THE example how to save and support their own -financial- industry with hundreds of Billions of $'s...

They are in fact REWARDING the criminals with tax payer's money

What a world.

LaoPo

It's just plain dumb. Short side players are by far the most knowledgable of market traders. If they're wrong they stand to have untold losses. Consequently, they do a heck of a lot more research on the targets of their short campaigns. Long only players should get on their knees and thank them for bringing to light the cancerous elements in the market. Instead they just pray someone will make their stocks go back up. "War, suspension of liberties, whatever, just please make my stocks go back up".

Ah, well...I remember an interview with the CEO of Sony Corp.

He despised stock traders, shorters and longers because that was not REAL WORK in his eyes, meaning not constructive, creating products or services.

In a way he's right because without the companies on the stockmarkets and entrepreneurs, creating new ideas and thus companies you wouldn't have a living and you would have to work in the rice paddies........

Get yourself a JOB man !

LaoPo