Perfect Storm Ahead

By all indications this is the week that the global credit crisis is going to break down the system. Unless drastic action is taken, we're going to see somebody big default and soon. That bailout has done nothing to loosen the credit markets. The Nikkei is down almost 400 points this morning. Euro markets are expecting that kind of drastic action and are looking for big gains on Monday after this weekend's emergency summit and Germany's agreement to insure all private bank deposits.

Germany acted to stem turmoil in its financial sector on Sunday, thrashing out a new rescue for imperiled lender Hypo Real Estate and, in a surprise move, pledging to guarantee private savings accounts.

After German banks and insurers shocked the government on Saturday by withdrawing support for a government-led 35 billion euro ($48.50 billion) rescue for HRE, Berlin scrambled to hammer out a new deal before markets opened on Monday.

Under an accord, struck just after 11 p.m. local time, the financial sector agreed to provide an extra 15 billion euros ($20.8 billion) in liquidity for HRE on top of the 35 billion they had already committed together with the Bundesbank, the Finance Ministry said.

"With this commonly forged solution, (Hypo Real Estate) will be stabilized and thereby the German financial marketplace strengthened in difficult times," the ministry said.

Earlier, the government said it had agreed to guarantee private deposits to help restore confidence amid the worst financial crisis since the 1930s.

"We say to savers that their deposits are safe," Chancellor Angela Merkel told a news conference in Berlin.

We'll see if it helps. Here in the States, officials are worried the rules and regs for the new bailout system may put them out of business if they agree to the bailout.

Last Monday, after the bill was thrown out by the House of Representatives, more than $1 trillion was wiped off the value of US stocks as the market was gripped by panic. The bill was passed on Friday afternoon, however, after the inclusion of $149bn of tax breaks and strict rules for participating banks.

But Wall Street analysts, believe the addition of so many terms to the bill might deter potential participants.

One of the least attractive elements is a section designed to curb executive pay at banks that participate in the bail-out package. These include limiting stock-related pay and banning 'golden parachutes' for executives.

'I think this hodge-podge of regulations and rules will be enough to put many [chief executives] off participating,' Caldwell said.

Sources close to Goldman Sachs and Merrill Lynch indicated the banks might choose not to participate in the bail-out as there is a growing view on Wall Street that the market may be bottoming out.

Analysts also believe that the mere presence of the government as buyer of last resort will be enough to get credit markets moving again, and that a large number of banks would not need to take part for the legislation to succeed.

In other words, now that the bailout is passed...Wall Street doesn't believe they need to actually participate in it, and the bailout's presence itself will jumpstart the markets and end the credit crisis.

So you see, just the promise of $700 billion will allow Wall Street to work again. They didn't actually NEED out taxpayer money, you see. Just the promise of it. After all, that money comes with strings these companies don't like, such as ACTUAL OVERSIGHT.

Wall Street will pass. Besides, they're waiting for that inevitable Fed rate cut. They have time now thanks to us.

Of course, that was the plan all along. It should be as effective as the last nine months of market interference has been.

In Which Zandar Answers Your Burning Questions

Atrios notes:

I admit to not really paying attention to this Senate race except to watch the increasing number of polls showing doom for Dole. Politico has a McCain person predicting that she'll lose.

A top official in the McCain camp told us Sen. Elizabeth Dole is virtually certain to lose in conservative North Carolina.

Anyone know how Kay Hagan is apparently pulling this off?

Liddy Dole got this seat six years ago when Jesse Helms retired. And despite Jesse Helms being a racist asshole, he was a racist asshole and a hell of a Senator to North Carolina. People were willing to put up with him as long as he did his job, even though he was something of a national embarassment, the crazy relative we didn't want to admit we had to outside folk, and believe me Southerners know all about playing THAT game.

Liddy Dole on the other hand is an absentee landlord, and hasn't done a damn thing for NC.

Yeah, Liddy Dole's in trouble because she's not Jesse Helms.

Changing The Subject Of "Changing The Subject"

McSame has overplayed his hand. He has nothing left but to go negative...and most importantly the strategy of unpredictability that has thrown Obama off his stride is over. McSame is no longer able to control the news cycle, because the events of the financial crisis are now controlling it.

More importantly, the predictability of McSame going negative is easily anticipated...and pre-empted.

Remaining relentlessly on the Bush/McSame economic message will win this election for Obama.

Palin Plays The Ayers Card

How desperate is Team McSame? Sarah Palin accused Barack Obama on Saturday of hanging out with "terrorists".

Alaska Gov. Sarah Palin on Saturday slammed Sen. Barack Obama's political relationship with a former anti-war radical, accusing him of associating "with terrorists who targeted their own country."

Palin's attack delivered on the McCain campaign's announcement that it would step up attacks on the Democratic presidential candidate with just a month left before the November general election.

"We see America as the greatest force for good in this world," Palin said at a fund-raising event in Colorado, adding, "Our opponent though, is someone who sees America, it seems, as being so imperfect that he's palling around with terrorists who would target their own country."

Palin made similar comments later at a rally in Carson, California.

Obama's Chicago, Illinois, home is in the same neighborhood as Bill Ayers, a founder of the radical Weather Underground, which was involved in several bombings in the early 1970s, including the Pentagon and the Capitol, and the two have met several times since Obama's 1995 campaign for a state Senate seat.

Palin cited an article in Saturday's New York Times about Obama's relationship with Ayers, now 63. But that article concluded that "the two men do not appear to have been close. Nor has Mr. Obama ever expressed sympathy for the radical views and actions of Mr. Ayers, whom he has called 'somebody who engaged in detestable acts 40 years ago, when I was 8.' "

This is the state of the honorable John McSame: Having somebody else deliver his slime for him. The Obama camp's response?

"What's clear is that John McCain and Sarah Palin would rather spend their time tearing down Barack Obama than laying out a plan to build up our economy."

Which is pretty much why this won't work.

But expect 30 more days of how Scary Black Secret Muslim Terrorist will destroy our way of life on January 20 if elected. It's the last card they have to play, because they have nothing else.