Sirius Is Saved ?

won’t have to file for bankruptcy today after Liberty Media Corp. agreed to invest $530 million to rescue the satellite radio broadcaster, the companies announced Tuesday.

Engelwood-based Liberty, the media and entertainment company founded by John Malone, will immediately loan Sirius $280 million, about $171 million of which will to pay off debt Sirius had coming due this week.

A second round of $250 million from Liberty (NASDAQ: LCAPA) will also be available to Sirius XM to help it pay its debts and ward off a potential takeover of Sirius by Charlie Ergen’s Dish Network Corp., the Englewood-based satellite TV company.

In return for the investment in Sirius, Liberty Media will own 12.5 million shares of preferred stock in Sirius XM (NASDAQ: SIRI) that Liberty can convert into common stock.

That would give Liberty a 40 percent ownership stake in the radio company.

Malone and Liberty Media CEO Greg Maffei are expected to join the Sirius XM board of directors.

"We are excited to be investing in Sirius XM. We have been impressed with the company, its operations and management team," said Greg Maffei, president and CEO of Liberty, in a written statement. "Sirius XM's ability to grow subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a 'must have' service."

Mel Karmazin, CEO of Sirius XM, called the deal with Liberty remarkable given today’s capital market’s, and validation of what the company envisioned when it merged the nation’s two satellite radio companies last year.

“This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM,” Karmazin said. “By strengthening our capital structure and enhancing our financial flexibility, this investment allows us to continue providing the great content and innovative programming our subscribers know and love.”

15 companies , are going out of bussiness ?

15 Companies That Might Not Survive 2009
R. Newman


With consumers shutting their wallets and corporate revenues plunging, the business landscape may start to resemble a graveyard in 2009. Household names like Circuit City and Linens 'n Things have already perished. And chances are, those bankruptcies were just an early warning sign of a much broader epidemic.

Moody's Investors Service, for instance, predicts that the default rate on corporate bonds - which foretells bankruptcies - will be three times higher in 2009 than in 2008, and 15 times higher than in 2007. That could equate to 25 significant bankruptcies per month.

We examined ratings from Moody's and data from other sources to develop a short list of potential victims that ought to be familiar to most consumers. Many of these firms are in industries directly hit by the slowdown in consumer spending, such as retail, automotive, housing and entertainment.

But there are other common threads. Most of these firms have limited cash for a rainy day, and a lot of debt, with large interest payments due over the next year. In ordinary times, it might not be so hard to refinance loans, or get new ones, to help keep the cash flowing. But in an acute credit crunch it's a different story, and at companies where sales are down and going lower, skittish lenders may refuse to grant any more credit. It's a terrible time to be cash-poor.

[See how Wall Street continues to doom itself.]

That's why Moody's assigns most of these firms its lowest rating for short-term liquidity. And all the firms on this list have long-term debt that Moody's rates Caa or lower, which means the borrower is considered at least a "very high" credit risk.

Once a company defaults on its debt, or fails to make a payment, the next step is usually a Chapter 11 bankruptcy filing. Some firms continue to operate while in Chapter 11, retaining many of their employees. Those firms often shed debt, restructure, and emerge from bankruptcy as healthier companies.

But it takes fresh financing to do that, and with money scarce, more bankrupt firms than usual are likely to liquidate - like Circuit City. That's why corporate failures are likely to be a major drag on the economy in 2009: In a liquidation, the entire workforce often gets axed, with little or no severance. That will only add to unemployment, which could hit 9 or even 10 percent by the end of the year.

[Want to land a plum job without paying taxes? Here's how.]

It's possible that none of the firms on this list will liquidate, or even declare Chapter 11. Some may come up with unexpected revenue or creative financing that helps avert bankruptcy, while others could be purchased in whole or in part by creditors or other investors. But one way or another, the following 15 firms will probably look a lot different a year from now than they do today:

Rite Aid. (Ticker symbol: RAD; about 100,000 employees; 1-year stock-price decline: 92%). This drugstore chain tried to boost its performance by acquiring competitors Brooks and Eckerd in 2007. But there have been some nasty side effects, like a huge debt load that makes it the most leveraged drugstore chain in the U.S., according to Zacks Equity Research. That big retail investment came just as megadiscounter Wal-Mart was starting to sell prescription drugs, and consumers were starting to cut bank on spending. Management has twice lowered its outlook for 2009. Prognosis: Mounting losses, with no turnaround in sight.

Claire's Stores. (Privately owned; about 18,000 employees.) Leon Black's once-renowned private-equity firm, the Apollo Group, paid $3.1 billion for this trendy teen-focused accessory store in 2007, when buyout funds were bulging. But cash flow has been negative for much of the past year and analysts believe Claire's is close to defaulting on its debt. A horrible retail outlook for 2009 offers no relief, suggesting Claire's could follow Linens 'n Things - another Apollo purchase - and declare Chapter 11, possibly shuttering all of its 3,000-plus stores.

[See 5 pieces missing from Obama's stimulus plan.]

Chrysler. (Privately owned; about 55,000 employees). It's never a good sign when management insists the company is not going out of business, which is what CEO Bob Nardelli has been doing lately. Of the three Detroit automakers, Chrysler is the most endangered, with a product portfolio that's overreliant on gas-guzzling trucks and SUVs and almost totally devoid of compelling small cars. A recent deal with Fiat seems dubious, since the Italian automaker doesn't have to pony up any money, and Chrysler desperately needs cash. The company is quickly burning through $4 billion in government bailout money, and with car sales down 40 percent from recent peaks, Chrysler may be the weakling that can't cut it in tough times.

Dollar Thrifty Automotive Group. (DTG; about 7,000 employees; stock down 95%). This car-rental company is a small player compared to Enterprise, Hertz, and Avis Budget. It's also more reliant on leisure travelers, and therefore more susceptible to a downturn as consumers cut spending. Dollar Thrifty is also closely tied to Chrysler, which supplies 80 percent of its fleet. Moody's predicts that if Chrysler declares Chapter 11, Dollar Thrifty would suffer deeply as well.

Realogy Corp. (Privately owned; about 13,000 employees). It's the biggest real-estate brokerage firm in the country, but that's a bad thing when there are double-digit declines in both sales and prices, as there were in 2009. Realogy, which includes the Coldwell Banker, ERA, and Sotheby's franchises, also carries a high debt load, dating to its purchase by the Apollo Group in 2007 - the very moment when the housing market was starting to invert from a soaring ride into a sickening nosedive. Realogy has been trying to refinance much of its debt, prompting lawsuits. One deal was denied by a judge in December, reducing the firm's already tight wiggle room.

[See why "Wall Street talent" is an oxymoron.]

Station Casinos. (Privately owned, about 14,000 employees). Las Vegas has already been creamed by a biblical real-estate bust, and now it may face the loss of its home-grown gambling joints, too. Station - which runs 15 casinos off the strip that cater to locals - recently failed to make a key interest payment, which is often one of the last steps before a Chapter 11 filing. For once, the house seems likely to lose.

Loehmann's Capital Corp. (Privately owned; about 1,500 employees). This clothing chain has the right formula for lean times, offering women's clothing at discount prices. But the consumer pullback is hitting just about every retailer, and Loehmann's has a lot less cash to ride out a drought than competitors like Nordstrom Rack and TJ Maxx. If Loehmann's doesn't get additional financing in 2009 - a dicey proposition, given skyrocketing unemployment and plunging spending - the chain could run out of cash.

Sbarro. (Privately owned; about 5,500 employees). It's not the pizza that's the problem. Many of this chain's 1,100 storefronts are in malls, which is a double whammy: Traffic is down, since consumers have put away their wallets. Sbarro can't really boost revenue by adding a breakfast or late-night menu, like other chains have done. And competitors like Domino's and Pizza Hut have less debt and stronger cash flow, which could intensify pressure on Sbarro as key debt payments come due in 2009.

Six Flags. (SIX; about 30,000 employees; stock down 84%). This theme-park operator has been losing money for several years, and selling off properties to try to pay down debt and get back into the black. But the ride may end prematurely. Moody's expects cash flow to be negative in 2009, and if consumers aren't spending during the peak summer season, that could imperil the company's ability to pay debts coming due later this year and in 2010.

Blockbuster. (BBI; about 60,000 employees; stock down 57%). The video-rental chain has burned cash while trying to figure out how to maximize fees without alienating customers. Its operating income has started to improve just as consumers are cutting back, even on movies. Video stores in general are under pressure as they compete with cable and Internet operators offering the same titles. A key test of Blockbuster's viability will come when two credit lines expire in August. One possible outcome, according to Valueline, is that investors take the company private and then go public again when market conditions are better.

Krispy Kreme. (KKD; about 4,000 employees; stock down 50%). The donuts might be good, but Krispy Kreme overestimated Americans' appetite - and that's saying something. This chain overexpanded during the donut heyday of the 1990s - taking on a lot of debt - and now requires high volumes to meet expenses and interest payments. The company has cut costs and closed underperforming stores, but still hasn't earned an operating profit in three years. And now that consumers are cutting back on everything, such improvements may fail to offset top-line declines, leading Krispy Kreme to seek some kind of relief from lenders over the next year.

Landry's Restaurants. (LNY; about 17,000 employees; stock down 66%). This restaurant chain, which operates Chart House, Rainforest Café, and other eateries, needs $400 million in new financing to finalize a buyout deal dating to last June. If lenders come through, the company should have enough cash to ride out the recession. But at least two banks have already balked, leading to downgrades of the company's debt and the prospect of a cash-flow crunch.

Sirius Satellite Radio. (SIRI - parent company; about 1,000 employees; stock down 96%). The music rocks, but satellite radio has yet to be profitable, and huge contracts for performers like Howard Stern are looking unsustainable. Sirius is one of two satellite-radio services owned by parent company Sirius XM, which was formed when Sirius and XM merged last year. So far, the merger hasn't generated the savings needed to make the company profitable, and Moody's thinks there's a "high likelihood" that Sirius will fail to repay or refinance its debt in 2009. One outcome could be a takeover, at distressed prices, by other firms active in the satellite business.

Trump Entertainment Resorts Holdings. (TRMP; about 9,500 employees; stock down 94%). The casino company made famous by The Donald has received several extensions on interest payments, while it tries to sell at least one of its Atlantic City properties and pay down a stack of debt. But with casino buyers scarce, competition circling, and gamblers nursing their losses from the recession, Trump Entertainment may face long odds of skirting bankruptcy.

BearingPoint. (BGPT; about 16,000 employees; stock down 21%). This Virginia-based consulting firm, spun out of KPMG in 2001, is struggling to solve its own operating problems. The firm has consistently lost money, revenue has been falling, and management stopped issuing earnings guidance in 2008. Stable government contracts generate about 30 percent of the firm's business, but the firm may sell other divisions to help pay off debt. With a key interest payment due in April, management needs to hustle - or devise its own exit strategy.

Chapter 11 for Sirius Satellite Radio ?

Sirius XM (NASDAQ: SIRI) is up against debt payments that its management has been saying would not be a problem.

According to The Wall Street Journal, "Sirius XM Satellite Radio Inc. is facing an important test of its viability this month: how it handles $174.6 million in debt coming due Feb. 17." Since the company has not reported its fourth quarter, no one knows for certain how much cash Sirius has. More debt payments are due later in the year.

Could the debt problem this month push Sirius into Chapter 11? It is impossible to tell, but the obligation has not been renegotiated or replaced with new debt.

Sirius may be best off in Chapter 11, given its huge debt load. Without that anchor it could operate more freely. The company's core business may be attractive enough to attract debtor-in-possession financing to get Sirius through the process.

At $0.12 a share, Sirius already trades like it is bankrupt. It ought to look at the airline industry and see how well Chapter 11 can work.

Big Three failure may be catastrophe ?? or Worse ??

Big Three failure may be catastrophe
Blow to economy could be costlier than bailout, automaker CEOs say
By S. CARTY and B HAGENBAUGH USA Today

When the heads of General Motors, Chrysler and Ford went to Capitol Hill last week, they tried to persuade lawmakers that if they go under, an already fragile U.S. economy will be dealt a blow far costlier than the $25 billion in aid the companies are seeking.


As lawmakers wrestled, then decided to head home and not quickly approve a bailout, foremost in their thinking was a question the Big Three CEOs apparently failed to answer: If we let these guys fail, how bad will it really be for the economy?

Critics say Detroit created its own problems with poor planning and inferior products, and cite a healthier foreign auto industry operating mostly in southern states that isn't seeking a taxpayer bailout. But even Toyota said over the weekend it fears the impact on the parts suppliers it uses if the U.S. auto industry collapses.

Moody's Economy.com chief economist Mark Zandi estimates that 2.6 million jobs -- about 1.9 percent of the U.S. work force -- would be lost if GM, Chrysler and Ford were to go under.

That includes more than 255,000 people directly tied to the three companies and another 2.3 million whose jobs are indirectly dependent -- everything from people who work in the steel, glass, fabric, tire and electronic industries to the barista who makes $4 cappuccinos for the ad executive who'll be out of work when his auto industry business ceases to exist.

Zandi argues the economy is too weak to absorb that fallout.

"This could be the thing to push us over," he says. "The ripple effect is like throwing a big boulder into the economic pond."

The auto industry is woven into the grass roots of the U.S. economy, through its dealer networks, the advertising it buys in newspapers and local TV and radio stations, the health care it buys for its workers and their families and the retirees it supports.

The domestic auto industry supports nearly 800,000 retirees and spouses with pensions and, until recently, health care for everyone. Now that's being cut back for white-collar retirees, but if the automakers file for bankruptcy, they could shed their pension costs and force the government to pick up the tab.

Advocates of a bailout argue that if one of the Big Three fails, it could take down the entire supply chain that cuts a wide swath from Wisconsin to Ontario, Canada, and south from Florida to Texas. As Toyota officials pointed out, the effect would be on all companies making vehicles in the USA.

The impact of the industry woes already is being felt beyond Detroit. Saturday, a Chrysler-Dodge dealer in North Brattleboro, Vt., closed after 20 years, citing slumping sales. It became one of the projected 700 dealers nationwide expected to have closed by the end of this year.

Advertising agencies and media from New York to local TV stations in New Mexico are seeing revenue dry up because the automakers and their dealers are spending less money hawking cars. Suppliers in North Carolina, host to roughly one-quarter of the parts-manufacturing base for the auto industry, are declaring bankruptcy at an alarming rate.

'Very difficult judgments'
The ripple effect of an industry collapse could further trim consumer confidence and unemployment, said Lyle Gramley, a former Federal Reserve Board governor who is senior economic adviser at the Stanford Group.

"As a general principle, I don't think that bailing out individual companies is a good idea," said Gramley. However, "You have to contemplate the possibility of 1 million employees losing their jobs and the entire industry at risk" if an automaker were to fail.

Comerica Bank chief economist Dana Johnson said there are some "very difficult judgments" for lawmakers to make about the potential impact an auto industry failure would have on the economy. If one or more of the companies were to go under, the U.S. government would be on the hook for unemployment benefits, retraining and pension obligations while receiving less in taxes, he said.

"There are roughly two parts producers for every employee at the car companies, and there are a lot of vendors -- steel producers, paint producers, glass producers, business services, accounting, advertising," he said. "There's no question that it is an important industry, that there are linkages to employment elsewhere."

Zandi and other economists argue there is a better way to aid the auto sector than to provide bailout loans.

There is growing support for allowing the companies go into bankruptcy, using government funds to guarantee financing from banks. That would allow the automakers to restructure, including tearing up old labor contracts and reducing their sizes. Government support could give consumers confidence that the car companies would exist after bankruptcy, soothing worries about car warranties and availability of replacement parts.

"Like the airlines, I think they should go into Chapter 11 bankruptcy and start with a clean slate," said Michael Cusumano, a professor at MIT's Sloan School of Management who has written two books on the auto industry. He said reorganization should include replacing management.

But then, there are two auto industries in the U.S. The first, based in and around Detroit, is GM, Ford and Chrysler. The second is sprinkled around the Southeast and includes foreign automakers Toyota, Honda, Subaru, Nissan, BMW and Mercedes-Benz.

Parts suppliers are spread out between them "like pearls on a necklace" along the highways connecting the South and the Midwest, said Thomas Klier, senior economist with the Federal Reserve Bank of Chicago.

Suppliers in the past tended to focus on one customer, but now almost all have overlapping customer bases. That's why Toyota is worried about the Big Three. About 75 percent of Toyota's suppliers here are North American companies who also make parts for the Detroit companies.

"We are concerned with the industry in general, but we're mostly concerned about our suppliers," Toyota spokesman Mike Goss said. "If the worst happens in Detroit and these companies suffer, we're worried about their longevity as well."

Depression Or Recession ??

Crisis Hits Main Street as Employers Cut More Jobs (Update3)
By S. Chandra and R.Miller
(Bloomberg) -- U.S. payrolls plunged in September, signaling the economy may be heading for its worst recession in at least a quarter century as the 13-month-old credit crisis on Wall Street finally hits home on Main Street.
Employers cut the most jobs in five years in September as cash-squeezed companies pulled back in an effort to bolster pinched profits. In its last employment report before Americans choose their next president, the Labor Department said the unemployment rate was 6.1 percent, a climb of 1.4 percentage points from a year before.
``If credit markets remain dysfunctional, the current recession could turn out to be as severe as any in the postwar period,'' said former Federal Reserve governor Lyle Gramley, now senior economic adviser at the Stanford Group Co. in Washington.
The spreading crisis is also having reverberations on the campaign trail, as polls show anxious voters increasingly see Democrat Barack Obama as the candidate best placed to see the U.S. through its economic travails. The unemployment rate has only risen twice in the year leading up to elections since World War II, and in each case the incumbent party lost.
`This country can't afford Senator McCain's plan to give America four more years of the same policies that have devastated our middle class and our economy for the last eight,'' Obama, 47, said in a statement.
McCain's Reaction
Arizona Senator John McCain, 72, took the opportunity to paint his opponent as a tax-and-spend liberal, whose prescriptions would exacerbate the crisis.
``Unlike Senator Obama, I do not believe we will create one single American job by increasing taxes, going on a massive spending binge, and closing off markets,'' McCain said in a statement. ``Our nation cannot afford Senator Obama's higher taxes.''
Job losses accelerated as the credit crisis deepened last month, forcing the failure or government takeovers of Lehman Brothers Holdings Inc., Fannie Mae, Freddie Mac and American International Group Inc.
The figures came hours before the House of Representatives passed a $700 billion rescue plan for the U.S. financial industry pushed by Treasury Secretary Henry Paulson. The Senate approved the legislation two days ago after the House rejected an initial version of the bill Sept. 29.
Market Reaction
Stocks rose and Treasury securities fell. The Standard & Poor's 500 index climbed 1.8 percent to 1,134.6 at 1:39 p.m. in New York. The yield on the benchmark 10-year note rose to 3.71 percent from 3.63 percent late yesterday.
Today's report showed that hours worked -- considered a good proxy for the state of the overall economy -- matched the lowest level since records began in 1964. That indicates the likely current recession may be at least as severe as the 1981-82 slump, during which gross domestic product shrank by 2.7 percent.
Payrolls fell by 159,000 in September, the Labor Department said in Washington. Aside from a 9,000 gain in government payrolls, all major categories showed declines except education and healthcare.
``The really bad news here is that job losses are now widespread,'' said Nariman Behravesh, chief economist at Global Insight Inc., a Lexington, Massachusetts, forecasting firm. ``The problems in housing and manufacturing are now spreading everywhere. We are in a recession, there is no debate about that.''
Health Services
Even the vibrant health-services industry is showing signs of succumbing to the economy's troubles. Health care employment rose 17,000, about half the average monthly gain for the prior 12 months.
Walgreen Co., the largest U.S. drugstore chain, reported Sept. 29 that its profits rose less than analysts estimated after it posted its smallest sales increase in a decade.
A private report today showed that services-industry growth remained stagnant in September. The Institute of Supply Management's non-manufacturing index slipped to 50.2 from 50.6 the month before. Fifty is the dividing line between growth and expansion.
Total payrolls were forecast to drop 105,000 after declining by a previously estimated 84,000 in August, according to the median of 76 economists surveyed by Bloomberg News. The jobless rate was projected to remain at 6.1 percent.
Rate Forecasts
Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said the unemployment rate may eventually rise to more than 7 percent as the credit crunch takes its toll on the economy. If that happens, that would make the overall rise in unemployment the biggest since the early 1980's.
Edelmira Clark, 53, of Chicago, said she was concerned about losing her job as a hotel housekeeper. Her company has already cut her work hours to two days a week.
``I'm trying to find a part-time job in the morning to balance, because I can't do only two days of work,'' said Clark, who immigrated to Chicago from Belize in 1997. ``But a lot of people, my friends, have lost their jobs for good.''
Workers' average hourly wages rose 3 cents, or 0.2 percent, to $18.17 from the prior month. Hourly earnings were 3.4 percent higher than September 2007. Economists surveyed by Bloomberg had forecast a 0.3 percent increase from August and a 3.6 percent gain for the 12-month period.
After today, the total decline in payrolls so far this year has reached 760,000. The economy created 1.1 million jobs in 2007.
Americans will go to the polls on Nov. 4 and the October jobs report is due Nov. 7.
`Angry' Voters
``Voters are extremely angry, and they want someone to blame,'' said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis.
Obama has opened up a lead over Republican rival John McCain in the aftermath of their first debate and amid growing concerns about the economy, according to a Pew Research Center survey taken Sept. 27 to Sept. 29. A mid-September poll from Washington- based Pew had shown the candidates were in a statistical tie.
Earlier in September, a Bloomberg/Los Angeles Times poll showed more respondents said Obama would do a better job handling the financial crisis than McCain, and almost half of the voters believed he had better ideas to strengthen the economy than his rival.
Factory Firings
Factory payrolls fell 51,000 after decreasing 56,000 in August. Economists had forecast a drop of 57,000.
Today's report also reflected the housing slump. Payrolls at builders declined 35,000 after falling 13,000. Financial firms decreased payrolls by 17,000, the most since November last year.
Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 82,000 workers after eliminating 16,000 in the previous month. Retail payrolls slid by 40,100 after a 25,400 drop.
In the past month, Hewlett-Packard Co., the world's largest personal-computer maker, announced it will cut 24,600 jobs, and auto-parts maker Federal-Mogul Corp. said it would eliminate 4,000 positions globally.
Marriott International Inc., the world's largest hotel chain, yesterday reported third-quarter profit fell 28 percent as U.S. companies and consumers cut back on travel.
Without action from Congress, ``the resulting credit squeeze could threaten businesses,'' Chief Financial said on a conference call. There are ``tens of thousands of jobs at stake in our company alone, and we are typical.''
Mounting job cuts will further limit consumer spending, which accounts for more than two-thirds of the economy. A Bloomberg survey in September predicted spending will be unchanged this quarter, the weakest performance since 1991.
The ISM on Oct. 1 said manufacturing shrank in September at the fastest pace since the last recession in 2001. The odds the central bank will lower its benchmark rate by a half percentage point, to 1.5 percent, were almost 100 percent today, up from 32 percent a week ago.

Bail out vote at 1pm est. on congress - will it pass??

(CNNMoney.com) -- The House started Monday what was expected to be a short debate ahead of a quick vote on a sweeping $700 bailout of the nation's financial system.
The vote comes after lawmakers and the Bush administration finalized legislation following a weekend of high-stakes negotiations over the controversial measure, which is designed to get battered U.S. credit markets working normally again.
"Today is the decision day," said Barney Frank, D-Mass., on the House floor. "If we defeat this bill today, it will be a very bad day for the financial sector of the American economy and the people who will feel the pain are not the top bankers and top corporate executives but average Americans."
Rep. Gary Miller, R-Calif., also urged passage of the bill, despite reservations he admitted all members had on the proposal.
"I have yet to talk to a member who wants to vote on this today," Miller said. "This is probably the toughest vote any of any of us have taken since we've been in Congress. If you just solely rely on the phone calls we're getting from home, listening to people who don't understand the complexities of our marketplace and what we're dealing with here, the easiest vote for you to make would be a no vote today. You have to go beyond that."
Indeed, with leading House Republicans signing on to the proposal on Sunday after expressing earlier reservations, the bill is now expected to pass. Senate Majority Leader Harry Reid said Sunday he hoped for a vote in that chamber by Wednesday at the latest.
Earlier, President Bush and Federal Reserve Chairman Ben Bernanke hailed the measure and urged Congress to move quickly to pass it.
Bush, speaking at the White House, called the proposed measure "an extraordinary agreement to deal with an extraordinary problem." He said he is confident the measure will win bipartisan support.
"With this strong and decisive legislation, we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls," Bush said. "We'll make clear that the United States is serious about restoring confidence and stability in our financial system."
Bush acknowledged that many voters were opposed to helping out Wall Street with tax dollars, but said there is little choice to move forward with the plan. He said most if not all of the tax money spent to buy distressed mortgage-backed securities should be recouped when the Treasury sells them in the coming years.
"Every member of Congress and every American should keep in mind - a vote for this bill is a vote to prevent economic damage to you and your community," Bush said.
Bernanke, who had spent hours before Congress last week testifying in favor of the measure, issued a brief written statement also promising that it would restore the flow of credit to households and businesses.
"I look forward to swift passage of the legislation," he said.
House Speaker Nancy Pelosi, D-Calif., said the provisions added by Congress will protect taxpayers from having to pay for the bailout.
"We sent a message to Wall Street - the party is over," she said at a press conference with Senate Majority Leader Harry Reid, D-Nev., and other Democratic leaders from the House and Senate.
The core of the bill is based on Treasury Secretary Henry Paulson's request for authority to purchase troubled assets from financial institutions so banks can resume lending and so the credit markets, now virtually frozen, can begin to operate more normally.
But Democrats and Republicans - concerned about the potential cost - have added several conditions and restrictions to protect taxpayers on the down side and give them a chance at some of the potential upside if the companies benefit from the plan. "People have to know that this isn't about a bailout of Wall Street. It's a buy-in so we can turn our economy around," Pelosi said.
Key negotiators for the financial rescue plan were e busy trying to line up votes on Capitol Hill on Sunday. House Majority Leader Steny Hoyer, D-Md., told CNN he believes a majority of representatives on both sides of the aisle can and will support the bill.
On Sunday evening, the House Republican working group, which stringently opposed earlier drafts of the plan and offered a counterproposal, indicated it would support the bill, and its members are encouraging other Republicans in the House to do the same.
"Nobody wants to have to support this bill, but it's a bill that we believe will avert the crisis that's out there," House Minority Leader John Boehner, R-Ohio, told reporters.
Banks and Wall Street firms, worried about both their own needs for cash and the condition of other institutions, essentially stopped loaning money to one another in recent weeks. That choked off the money being made available on Main Street in the form of mortgage loans, business loans and other consumer borrowing.
The basis for the crisis is problems in mortgage-backed securities, which saw their value plunge as home prices have gone into their worst slide since the Great Depression and foreclosures soared to record levels. In turn, the market for trillion of dollars worth of those securities held by major firms evaporated, sending them down to fire sale prices and raising the risk of widespread failures among the nation's major financial firms.
Under the plan, Treasury will buy the mortgage backed securities, either directly from the firms or through an auction process. It may also arrange to provide guarantees for the securities up to their original values in return for premiums they would charge current holders of the securities.
To make the legislation more politically palatable, the bill calls for the government, as an owner of a large number of mortgage securities, to exert influence on loan servicers to modify more troubled loans to help prevent additional foreclosures. It also provides that the government will take equity in the firms that sell the securities to the government, and limits pay packages for top executives.
The legislation comes amid great upheaval in the nation's financial system. On Monday morning, the Federal Deposit Insurance Corp., which insures deposits at failed banks, arranged for the sale of the banking assets of Wachovia (WB, Fortune 500), the nation's No. 4 bank holding company, to Citigroup (C, Fortune 500) for $2.2 billion in stock.
That follows three weeks of other shocks: the Treasury Department's seizure of mortgage finance firms Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500); Wall Street firm Lehman Brothers' bankruptcy filing; rival Merrill Lynch (MER, Fortune 500) purchase by Bank of America (BAC, Fortune 500).
In addition, the Fed bailed out insurance giant American International Group (AIG, Fortune 500), loaning it $85 billion in return for a nearly 80% stake. while Washington Mutual (WM, Fortune 500), the nation's largest savings and loan, became the largest bank failure in history.

Georgia & Russia Snarl , Can u make money ?? ( Gold & Oil )

WHAT A SHAME! IT WOULD HAVE BEEN A DREAM TICKET: Edwards and Spitzer. They'd have been a cinch in 2012, if Obama doesn't make it this year, to walk away with the votes of the all-important hot-hormones group, 18-to-29-year-old males. (You know, the coveted cohort that TV networks salivate over as viewers, and not the least of reasons television is not fit for human consumption.)

Just think about what a terrific ad campaign that well-known agency, Smirk and Smirk, would have created showing Edwards and Spitzer winking atop the catchy slogan spelled out in big bold letters: "Vamoose, Viagra! The country needs a real man as president!"

But then Edwards, nary a hair nor a dimple out of place, does his mea culpa bit on the tube and that's a sure turnoff for the testosterone voter, who likes his hamburger raw and his candidate unrepentant. Hang in there, guys, and don't be disconsolate: If history is any guide, you can bet your last dollar we'll never run out of straying Democrats.

Still, we can understand the widespread disappointment. It'd be a wonderfully refreshing change if, when a candidate talked about foreign affairs and conquests, he wasn't boring us to tears with all that guff about realpolitik or boasting about sending in the marines, but, instead, chortling about the liaisons he struck up at the latest boondoggle summit and the sweet nothings he whispered into the ear of one comely lass or another. À la the current president of France.

Alas, the way the world turns these days, there's scant time or inclination for a president to display what Dubya's daddy called a kinder, gentler mien, much less regale the public with accounts of his romantic dalliances. Last week furnished a telling example of the omnipresent pressures the nation's chief executive is prey to.

No sooner was Mr. Bush settling into his privileged perch at the Olympics, poised to enjoy a rare day of fun and games, with his old pal Vladimir Putin nearby, than came the news that the Russians were beating up on their feisty little neighbor, Georgia.

Had the president, as he is wont to do, been able to peer into Mr. Putin's eyes, he might have spotted the venomous black hole where the Putin soul was supposed to be and would have been able to alert the world that serious trouble was brewing. But the wily Russian had slipped on his shades, thus denying Mr. Bush the chance to perform one of his famous soul-searches and perhaps forestall Moscow's power play.

One could argue that Georgia is the latest casualty of Iraq. For if we weren't so inextricably tied down in Iraq or, at least, if our involvement hadn't been so poorly planned and ineptly pursued, it's more than a little doubtful that Russia would have been tempted to flaunt its revived fortunes by unveiling its iron fist.

Maybe it was the competition for traders' attention from the Olympics or that Wall Street merely shrugged it off as a not a really serious business, but the Russian strike and the growls from Washington it triggered caused nary a ripple in markets, whether financial or commodities. Or, it could be that all the nervous types took the week off, giving their frazzled nerves a badly needed vacation.

Stocks ambled on in their by-now familiar unpersuasive fashion, desperately seeking any shred of an excuse to go higher. Oil had the briefest respite from its persistent vertigo, on hopes that the Georgia fracas would interrupt the flow of crude and natural gas, but quickly became discouraged and resumed its skid, hitting a fresh low for the past three months.

Even gold, which feeds on the world's misery and ordinarily would get a nice lift from a confrontation between global heavyweights, extended its swoon. That's the kind of thing that really tests a man's faith: If you can't trust gold to react with quivers (and quantum leaps) when the U.S. and Russia snarl at each, what can you believe in?

Seems like a case of mass narcosis is afflicting investors just about universally. We thought we'd try that one out on some supposedly knowledgeable shrinks, only to discover that in August they all flock to Cape Cod, and studiously leave their cellphones behind.

JUST ABOUT THE LUCKIEST PEOPLE we've ever come across happen to toil in Wall Street and Washington. They vary across a wide spectrum in how much money they make and in the usual distinctions of height, weight, age, intellect and amiability. What they share are three things which are closely related. The first is that, in some significant way, either directly or as mouthpieces, their professional terrain is economics.

The other two things they have in common are: They never need bestir themselves, lay down the book or turn off the television set or tear away from their computer and go out to buy anything, no matter how trivial or important; someone else -- a wife, a husband, say, or an assistant, or perhaps an indentured slave -- performs that task. And, last but not least, they're all of a single mind on inflation -- namely, for all intent and purpose, there isn't any.

Not content with letting the data tell its story (lest, we can only assume, it doesn't comport with their perception), they've devised an alternative to the standard price indexes called "core" inflation, which conforms to what they deem a proper (inevitably sharply lower) measure of inflation. Core is nicely constructed to exclude energy and food, which account for nearly a quarter of consumer expenditures, and occasionally other categories where prices show an untoward tendency to rise.

Last month, reports the Labor Department, consumer prices shot up a scorching 0.8%, twice the consensus guess, and the sharpest rise in 17 years. The core cabal were quick to take comfort in the fact that core inflation was up a much more demur 0.3%, and pooh-poohed the big jump in headline inflation (that's what they snootily dub the consumer-price index, to give it a tabloid veneer, which makes it seem inherently unreliable). Their feverish fetish for the core number also permitted them to blithely ignore that consumer prices in the past 12 months scored the biggest rise since January 1991.

The truth is that inflation, if not rampant, is ubiquitous and gathering strength. It may not be up to the wild inflation we experienced in the 1970s, but it's plenty mean enough and getting worse. It's now firmly embedded in the economy, and it's not going to vanish magically because crude is down to "only" $113 a barrel, or the dollar has inched its way off the bottom, or even if one of the core faithful waves his wand and says Abracadabra!

Getting a true read on consumer prices isn't just an academic exercise. John Williams, proprietor of Shadow Government Statistics, has built rather a brilliant career out of analyzing the official data and showing in exquisite detail where they depart from reality. He points out, moreover, that an awful lot is dependent on the CPI, not least Social Security and other forms of compensation.

On that score, he reckons that changes made over the years aimed at understating inflation have reduced current Social Security payments to half of what they otherwise would have been. In other words, today's Social Security checks would be double what they are, were it not for that serendipitous tinkering, especially during the Clinton years. Ah, well, the geezers never knew what hit them.

Or, as John puts it ever so sweetly, "The CPI worked reasonably well into the early 1980s. In recent decades, however, the reporting system increasingly succumbed to pressures from miscreant politicians, who were intent upon stealing income from Social Security recipients, without ever taking the issue of reduced entitlement payments before the public or Congress."

After World War II, the consumer-price index was included in Detroit's contracts with the auto workers and then "found its way not only into other union agreements, but also into most commercial contracts that required consideration of cost/price changes or inflation." Obviously, then, its reach extends into any number of nooks and corners in the economy.

The changes in the CPI, not a few of them made with the malicious intent of hiding the true rate of inflation, have, John figures, understated inflation by roughly seven percentage points. What this means simply is that the 5.6% rise over the past 12 months officially reported was actually, by his meticulous figuring, a whopping 13.4%. That makes complacency among the core cabal willfully silly.

Or as John neatly puts it, "The Pollyannas on Wall Street like to play games with the CPI...It is common to hear financial pundits cite annual 'core' inflation as a way of showing how contained inflation is. Such comments are moronic and such commentators are due the appropriate respect."

As you can readily tell, we're kinder than John, so, as intimated early on in this screed, we ascribe the core gang's benign view toward inflation not necessarily to a deficient IQ but to their failure to buy even so much as a toothpick on their own.

Bear Market 2008 !

Battered by Oil, Dow Touches Bear Territory
By MICHAEL M. GRYNBAUM
Published: June 28, 2008
After eight brutal months on Wall Street, the Dow Jones industrial average finally made it official: Blue-chip stocks have stumbled into bear territory.
After a brief rally in April, stocks indexes have resumed a downward trend. For the week the Dow industrials fell nearly 4.2 percent.

A trader at the New York Mercantile Exchange on Friday, where the price of crude oil settled at $140.21 a barrel, up 57 cents.
A brief 155-point slide on Friday afternoon brought the decline in the Dow to 20 percent from its October peak, an ignominious figure that is generally regarded as marking the start of a bear market. The index ended down 107 points, a mere 0.1 percent above the threshold. The broader Standard & Poor’s 500-stock index has not fallen quite as much.
The eight-month journey has roughly followed the twists of the subprime mortgage crisis, with a significant drop after the Bear Stearns collapse and a tantalizing rally when the economy appeared to recover slightly last month.
But in June, as the price of oil kept rising and the pain in the financial industry showed no signs of easing, the losses gained momentum. Many investors concluded that the economy was in worse shape than they had initially feared. This month, as the price of crude has gained about $13, the Dow has shed more than 1,000 points. The index closed at 11,346.51.
Few of the 30 companies in the Dow industrial index were spared Friday, reflecting growing concern among investors that the ongoing credit squeeze and record energy prices are taking a severe toll on industries throughout the economy. Procter & Gamble fell 2.2 percent. Boeing sank almost 1.9 percent. General Motors, which had plunged to its lowest level in decades on Thursday, eked out a small gain.
“The problem is, right now, things are too simple,” said Brian Gendreau, a strategist at ING Investment Management. “Whether it’s for airlines or automobiles or industry after industry, the market as a whole has become a play on energy, on oil.”
The broader stock market has fared better than the Dow, but only slightly. The Standard & Poor’s 500-stock index, a broader measure of American stocks, fell 0.37 percent on Friday to close at 1,278.38. It is 18.3 percent off its October high.
Entering a bear market is a bleak milestone, if primarily a symbolic one. But it would make official what investors have known for months: The economy is in trouble, with little relief in sight.
Since the Dow reached its record high last October, all but three of the 30 stocks in the index have lost value. The biggest losers are General Motors (down more than 70 percent), Citigroup (down 64 percent) and the American International Group (down 60 percent).
Wal-Mart has gained almost 25 percent. Chevron Corporation and I.B.M. have posted modest gains.
“Three months ago, I could have said, well, we’re in a dual economy,” Mr. Gendreau said. “Some sectors like housing or finance aren’t doing well. Other sectors are doing fine. Now, a lot of those assumptions have been called into question. It’s all been driven by developments in a single commodity market.”
A similar pattern has popped up all over the world, where several central banks have warned about encroaching inflation, primarily as a result of the run-up in energy prices.
Nearly halfway through the year, stock-market investors the world over are nursing losses. Blue-chip indexes in France, Germany and other European countries are down more than 20 percent. Emerging markets in China and Vietnam have lost about half their value.
And there appears to be little on the horizon to stanch the losses.
“We still have worries about high oil prices, worries about inflation, in my mind still questions about the economy,” Richard Sparks, an analyst at Schaeffer’s Investment Research, said. “Even though we’ve seen consumer spending bump up with the retail checks, my question is what happens at the end of next month when there are no stimulus checks coming out any more.”
The last bear market, as measured by the broad S.& P. 500 index, stretched from March 2000 to October 2002. During that time, the S.& P. 500 fell almost 48 percent.
During the 20th century, the stock market went through three great bear runs: 1901-21, 1929-48 and 1965-82. Those periods coincided with geopolitical or economic turbulence — wars, the Depression, stagflation. Of course, all of those periods eventually gave way to great bull markets.
While stock prices have fallen this year, shares still are not all that cheap by historical standards. On Friday, the 500 stocks in the S.& P. 500 traded at an average of 21.2 times those companies’ earnings per share. Since 1990, that price-earnings ratio has averaged 24.3.
The Nasdaq Composite Index, heavily weighted with technology stocks, closed down 0.25 percent, or 5.74 points, at 2,315.63. Treasury bond yields fell, and the dollar weakened against the euro.
The benchmark 10-year Treasury note rose 17/32, to 99 8/32. Its yield, which moves in the opposite direction, fell to 3.97 percent, from 4.03 percent.