STATUS: BAILOUT & FINANCIAL MARKETS

THE BILL STATUS:
Bill# has changed to HR1424: http://www.opencongress.org/bill/110-h1424/show Senate used an old renewable energy tax credits bill from last December and added the new Bailout bill to it. Who would guess.
Senate vote breakdown on Wednesday night: http://www.opencongress.org/roll_call/show/5093
Last Monday vote breakdown: http://globaleconomicanalysis.blogspot.com/2008/09/metrofax-compatible-fax-list-for-all.html
The 12 key House Nah votes last Monday; up for re-election: http://globaleconomicanalysis.blogspot.com/2008/09/congressional-most-endangered-list.html

Live on CSPAN – Friday House vote http://www.c-span.org/Watch/C-SPAN_wm.aspx starting at 9 am Friday October 03, 2008

THE MARKET SITUATION:
Nouriel Roubini Oct 3, 2008
Financial and Corporate System is in Cardiac Arrest: The Risk of the Mother of All Bank Runs
It is now clear that the US financial system - and now even the system of financing of the corporate sector - is now in cardiac arrest and at a risk of a systemic financial meltdown. I don’t use these words lightly but at this point we have reached the final 12th step of my February paper on “The Risk of a Systemic Financial Meltdown: 12 Steps to a Financial Disaster” (Step 9 or the collapse of the major broker dealers has already widely occurred).
Yesterday: Thursday a senior market practitioner in a major financial institution wrote to me the following:
Situation Report: So far as I can tell by working the telephones this morning:
· LIBOR bid only, no offer.
· Commercial paper market shut down, little trading and no issuance.
· Corporations have no access to long or short term credit markets -- hence they face massive rollover problems.
· Brokers are increasingly not dealing with each other.
· Even the inter-bank market is ceasing up.
This cannot continue for more than a few days. This is the economic equivalent to cardiac arrest. Then we debated what is necessary to restart the system.

MY THOUGHTS:
I am so much against the HR1424 in its current form; however, after reading Roubini comments today, it is not clear that we have a few more weeks to reconstruct this bill. If it does pass, we will need to work ceaselessly to shift the burden back onto Wall St via insisting on a Preferred Share deal for the value of rescue funds; I fail to see how purchasing junk assets that have no established value will not lead to more corruption since these transactions will NOT be transparent to all parties until well after the criminals have disappeared from the scene of the crime.