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Part 2 -

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Congress approved a $700 billion bank bailout Friday, but stocks tumbled as investors worried that the plan wouldn’t be enough to stem the credit crisis or keep the US economy from falling into a recession.

President Bush signed legislation in July that raised the debt ceiling to $10.615 trillion. Meanwhile, the financial bailout legislation passed by the Senate last night would raise the debt ceiling further to $11.315 trillion.

Thank you Mr. Paulson, thank you from my future children and grand children.

If you had purchased $1000 in shares of Delta Airlines one year ago, you would have $49 today. If you had purchased $1000 in shares of AIG one year ago, you would have $33 today.

If you had purchased $1000 in shares of Lehman brothers one year ago, you would have $0 today. But If you had purchased $1000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling refund, you would have received $214. Based on the info provided, the best current investment plan is to drink heavily and recycle. It is called the 401(keg).

A recent study found that the average American walks about 900 miles a year. Another study found that Americans drink, on average 22 gallons of alcohol a year. That means, on average, Americans get about 41 miles to the gallon!

- Suggested by Randy Gale

While the congress rejected the bail out bill (barely), they did not, however, pass a bill that states that there would be no more proposition to bail out the investment banks, ie - Wall Street.

A likely scenario is that they will keep the PPT (plunge protection team) on a leash and let the market slide a bit more like it did Monday on the news of no passing of the bill.

Once the dire predictions from the establishment are realized, the congress will cave in and since there are now less pressure from the public (after losing another 10-15% of their nest egg) - they will pass this “Trillion-Dollar-Baby” like it was a walk in a park.

Is the “October Surprise” DOW declining by 1,000 points? We shall see.

No matter what the congress does it is not good for an average American - would you rather add 10% additional percent to the national debt and therefore probably devalue dollar a bit more or lose 10-15% of your 401(k), IRA, etc.?

HOW ABOUT BOTH?! Not a pleasant but a likely scenario.

When I talked to Rob the other day on his thoughts about the new “new deal” he mentioned how S&P500 was at 800 at the end of 2002 recession and we didn’t have the problems we are facing today.

Considering the market is currently at 1,200 ish - you do the math on how much more room we’ve got on the downside - 35%+!!!

I have been preaching for almost 2 years now to get supply of gold, silver and stored food - cheap insurance considering the circumstances.

original idea by Moise Levi

Not a back week considering the speculation and volatility in the markets. We didn’t get as much of a lift by the end of the week as we anticipated and Friday gap down didn’t help the cause -

Intraday Highlights From This Weeks -

Monday -

Wednsday -

Thursday -

Friday -

Not that I recomend trading our forecasts intraday, I just thought I share this with you. By the way Tuesday was way off and there is no need to post it.

As a result of the proposed $700 billion US government bailout, the S&P 500 has generally rallied over the past week (up 4.5%). However, the S&P 500 still trades down over 22% from its October 2007 highs. For some perspective on the latest stock market action, today’s chart presents the current trend of the S&P 500.

For all the volatility of the past year, the S&P 500 has traded within the confines of a downward sloping trend channel. As today’s chart illustrates, the proposed government bailout came just in time to help the S&P 500 trade up from support (green line) — though the longer-term trend remains in effect until proven otherwise.

http://finance.yahoo.com/q?s=wm

It was announced today, after-hours, that the FDIC is taking control of Washington Mutual (WM) and selling its deposits as well a number of branches to JP Morgan for $1.9 billion.

Losing $6.3 billion in the last three quarters and getting cut to “junk” status didn’t give WM many options to choose from. $19 billion in losses is projected through 2011, but some say the number could be as high as $30 billion.

Currently, WM has approximately $309.7 billion in assets, $227 billion in real estate loans and $181.9 billion in customer deposits. Additionally, there are 2,239 branches and 43,198 employees who work at WM. This acquisition now makes JP Morgan nearly similar in size with Citigroup.

We should see an Indymac-related type of run tomorrow at Washington Mutual retail banking centers. If I had money at WaMu, that’s what I would do, 6:00AM, just to get in line first.

Not that I recomend trading G-Line forecasts intraday but I though I’d share with you todays market action with the forecasted line -

On September 1st, few knew that AIG, the largest insurance company in the world with over $1 trillion in assets, was in deep trouble. By September 12th, the rumors about major trouble were everywhere. By September 15th AIG’s corporate life expectancy was being measured in days, and the question was: bankruptcy, buyer or bailout? By the evening of September 16th, the federal government had massively intervened, making an $85 billion loan to AIG in exchange for a controlling 79.9% equity share of the company.

Welcome to the brave new world of credit derivatives driven collapses. A world that is far more dangerous than the world of subprime mortgage derivatives. A complex world that because of its sheer size can potentially cause more damage in a matter of days than the subprime mortgage derivatives caused in their first year in the headlines. The chart below shows the relative size of the credit derivatives and subprime mortgage markets.