Britannia Radio

This is an unexpected bombshell and I expect that Meltdown Monday 
will be nothing compared with what is to come.

Simultaneously is a ComRes Poll on which I report separately with 
further indications that the British public are rallying behind the 
very man who has made a crisis with its origins elsewhere into a 
domestic catastrophe.   The public seemingly are getting to love 
their torturer.

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THE TIMES    29.9.08
US banking bailout in chaos after shock House of Representatives vote

Suzy Jagger in New York and Patrick Hosking

The financial system lurched closer to a catastrophic breakdown 
tonight after the US Congress dramatically rejected a bailout plan 
designed to restore confidence to paralysed banks.

Wall Street suffered one of its worst days in history. In 24 hours 
five banks across the West, including Britain's Bradford & Bingley, 
had to be rescued to avoid insolvency.

With plans for the biggest rescue of Wall Street since the Great 
Depression in tatters, the Dow Jones industrial average of shares 
dived almost 800 points, losing 7 per cent of its value. It was the 
worst one-day points fall and the worst percentage fall since Black 
Monday in 1987.

The surprise rejection of the bailout unleashed chaos on Wall Street 
and triggered fears of a new wave of banking collapses. Traders and 
central bankers were braced for panic selling when the Asian markets 
open. Other economies had looked to America to lead the way out of 
the crisis.

The extraordinary events came on what was already a day of 
unprecedented state intervention. Hours earlier, central banks 
injected billions of extra dollars into the markets, taking available 
funds to $480 billion.

Wall Street derived little comfort from rebel Republicans who said 
that they were keen to devise another plan.

Henry Paulson, the US Treasury Secretary, said: "This is much too 
important to simply let fail." Nancy Pelosi, the Speaker of the House 
of Representatives, said that the result would not be allowed to 
stand. But there will not be another vote until Thursday at the 
earliest.

Steny Hoyer, the House Majority Leader, had warned of the 
consequences of failing to pass the bailout bill:
"A meltdown would begin on a few square miles of Manhattan, but 
before it was over no city or town in America would be untouched."

American taxpayers, who will elect a new President in five weeks' 
time, have hated the bailout from the beginning.

Already struggling to cope with rising unemployment, collapsing 
property prices and the rising cost of living, many resented having 
to bail out Wall Street bankers with their own money.

The plan would have cost each taxpayer more than $5,000. The rescue 
scheme was designed by Mr Paulson.

The bailout fund would have been used to buy toxic assets on the 
books of the world's biggest banks.

He hoped that once the banks dumped those assets into a massive 
financial landfill they would begin lending to one another again and 
America's banking system would return to normal.

His request triggered almost a fortnight of round-the-clock meetings 
in Washington as Mr Paulson sought to secure enough support for 
Congress to pass the legislation required.
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TELEGRAPH    29.9.08    @ 11.10pm BST
US economy: $700 billion Wall Street bail-out rejected on Meltdown 
Monday 2
The $700 billion bail-out to save the global financial system from 
potential collapse has been rejected by US politicians.

By Robert Winnett

Amid extraordinary scenes, Wall Street's Dow Jones index plunged by 
700 points - more than six per cent - within minutes of the American 
Congress voting against the plans.

Although share prices partially recovered, British investors are 
braced for further sharp falls following a day of turmoil in which 
the London stock exchange suffered one of its biggest ever daily drops.

Frantic negotiations are underway in Washington to try and rescue the 
bailout package. American politicians said they were determined to 
negotiate a deal but the ongoing uncertainty is likely to have 
profound effects on financial markets this week.

George W Bush, the American President, previously warned that without 
the scheme the impact on the US economy would be devastating. He also 
said that Americans would struggle to get mortgages, credit cards or 
loans.

Ben Bernanke, the chairman of the Federal Reserve, had warned of 
``grave threats'' tothe financial system if Congress rejected the plan.

Mr Bush, who staked his political reputation on securing the deal, 
that he was "very disappointed". Gordon Brown, the Prime Minister, 
was said to be monitoring the situation "very closely".

Under the terms of the $700 billion bail-out the US Government was to 
take on bad banking debts. It was hoped that this would rescue 
beleaguered banks that would then be free to begin lending again.

However, American politicians were growing increasingly wary that 
voters would regard the scheme as using taxpayers' money to save 
wealthy Wall Street banks who should be allowed to fail.

The rejection of the package - blamed on the Republicans - was 
branded as potentially one of the most significant financial events 
in a generation.

The meltdown in America came after financial markets in Britain, 
Europe and Asia had already suffered one of the worst days on record 
amid growing doubts over the rescue package.

The London stock market fell by more than five per cent on Monday - 
the biggest one-day fall in the current crisis and the eighth worst 
ever.

The pound also recorded its biggest one day fall in more than 15 
years amid growing fears over the state of the British economy.

The financial turmoil came in the wake of Alistair Darling's 
announcement that Bradford & Bingley (B&B), Britain's eighth biggest 
mortgage lender, is to be nationalised.

In Europe and America, governments have been forced to step in to 
help a further four banks including Belgian giant Fortis - Britain's 
third largest motor insurer - and the US's fourth largest bank 
Wachovia. Authorities also intervened to save an Icelandic investment 
company with links to a number of British high-street chains 
including Debenhams.

There are now growing fears that despite the emergency interventions, 
Government action is failing to quell the growing panic and distrust 
which is plaguing the financial markets. Experts warned that the 
effects on the economy and on household finances will be severe.

The former Prime Minister Tony Blair said: "What has happened has 
left everybody surprised, shocked, bewildered. Not even the experts 
were able to predict the full scale of this. In these circumstances 
there is no guide book, no rules on what to do."

On another day of turbulence:
=Shares in Royal Bank of Scotland (RBS) dropped by more than 20 per 
cent amid concerns over its exposure to the ongoing credit crisis. 
Shares in the bank closed down 13 per cent as the B&B nationalisation 
failed to end the turbulence facing Britain's banks.

=The FTSE-100 index of Britain's biggest companies fell by 270 points 
to close at 4,818. A global index of stock markets fell by the 
largest amount in more than a decade. In late trading, the Dow Jones 
index was down 571.9 at 10571.3, a fall of 5.13 per cent.Mortgage 
lending ground to a halt during August. It fell 95 per cent to just 
£143 million - the lowest since records began in 1993 - as banks 
rationed credit. The figures prompted warnings that further house 
price falls are now imminent.

=Homeowners were warned that mortgage rates will rise. Northern Rock, 
Nationwide and HBOS are among those increasing home loan costs.
Financial regulators said that although they were confident that 
other banks were secure, the turmoil had not yet ended.

Lord Turner, the new head of the Financial Services Authority (FSA), 
said: "We are not necessarily right at the end of this process," he 
said.
Regulators and central banks are particularly concerned that despite 
pouring billions of pounds into the financial markets, banks are 
still reluctant to lend money. The latest mortgage figures are 
causing particular alarm.

George Osborne, the shadow Chancellor, said the situation had to be 
stabilised, and then politicians must reflect on what caused the 
economic "wreckage". He offered to hold talks with Labour to work out 
a rescue solution in this country.

He said: "The task at hand on a day like this is to work out what we 
can do to stabilise the situation, what the American government can 
do now they have lost the vote in Congress."

=======================
CNN MONEY 29.9.08  @6.40pm ET [=10.40pm BST]
Bailout plan rejected - supporters scramble
House leaders trade partisan words after historic financial rescue 
goes down in defeat.

By Chris Isidore, CNNMoney.com senior writer


NEW YORK (CNNMoney.com) -- The fate of the government's $700 billion 
financial bailout plan was thrown into doubt Monday as the House 
rejected the controversial measure.

The next steps were unclear. The abrupt defeat left the Bush 
administration and congressional leaders scrambling to figure out 
whether to renegotiate the bill and introduce it again as soon as 
Thursday or to try other options.

Stock markets reacted violently. Investors who had been counting on 
the rescue plan's passage sent the Dow Jones industrial average down 
well over 700 points. The stock gauge closed 778 points lower - 
nearly 7%.

The measure, which is designed to get battered lending markets 
working normally again, needed 218 votes for passage. But it came up 
13 votes short of that target, with a final vote of 228 to 205 
against. Two-thirds of Democrats and one-third of Republicans voted 
for the measure.

President Bush, who earlier in the day said he was confident the bill 
would pass, said he was "very disappointed" by the House vote. 
Treasury Secretary Henry Paulson, speaking at the White House, said 
he will continue to "use all the tools available to protect" the 
economy.

Republican leaders, who had pushed their reluctant members to vote 
for the bill, pointed the finger for the failure at a speech given 
Monday by Speaker Nancy Pelosi, D-Calif.

Pelosi, speaking on the House floor, had blamed the nation's economic 
problems on "failed Bush economic policies."

House minority leader John Boehner, R-Ohio, said after the vote that 
passage would have been possible if it had not been for Pelosi's 
"partisan speech."

Rep. Barney Frank, D-Mass., one of the main congressional 
negotiators, dismissed the GOP claim that Pelosi's speech was 
responsible for Republicans voting against the bill. "Because 
somebody hurt their feelings, they decided to hurt the country," 
Frank said. "That's not plausible."

'Our time has run out'
The four-hour debate that preceded Monday's vote included impassioned 
pleas for and against the measure from Democrats and Republicans 
alike. Party leaders told members that the only way to protect the 
economy from a spreading credit crunch was to vote for the difficult-
to-swallow measure.
"Our time has run out," said Rep. Spencer Bachus, R-Ala., the ranking 
Republican on the House Financial Services Committee. "We're going 
make a decision. There are no other choices, no other alternatives."

Added Frank: "Today is the decision day. If we defeat this bill 
today, it will be a very bad day for the financial sector of the 
American economy."

Boehner told his members, many of whom objected to the measure, that 
they had to accept something he and many of them found distasteful.
"If I didn't think we were on the brink of an economic disaster, it 
would be the easiest thing to say no to this," Boehner said. But he 
said lawmakers needed to do what was in the best interest of the 
country.

One lawmaker who voted against the bill, Rep. John Culberson, R-
Texas, said the measure would leave a huge burden on taxpayers. "This 
legislation is giving us a choice between bankrupting our children 
and bankrupting a few of these big financial institutions on Wall 
Street that made bad decisions," he said. Culberson voted against the 
bill.

Other conservative Republicans who voted "no" argued the bill would 
be a blow against economic freedom.

Thaddeus McCotter, R-Mich., said the bill posed a choice between the 
loss of prosperity in the short term or economic freedom in the long 
term. He said once the federal government enters the financial 
marketplace, it will not leave. "The choice is stark," he said.

Some Democrats voted against the bill for not doing enough to help 
taxpayers facing foreclosure or unemployment and accused proponents 
of moving too fast.

"Like the Iraq war and Patriot Act, this bill is fueled by fear and 
haste," said Lloyd Doggett, D-Texas.

The runup to the vote
The debate followed a weekend of marathon negotiations between 
lawmakers and administration officials to hammer out legislation.

Leading House Republicans signed on to the proposal on Sunday after 
expressing earlier reservations.

The core of the bill is based on Paulson's request for the authority 
to purchase troubled assets from financial institutions, so banks can 
resume lending and the credit markets, now virtually frozen, can 
begin to operate more normally.

Democrats and Republicans - concerned about the potential cost - 
added several conditions and restrictions to protect taxpayers on the 
downside and give them a chance at some of the potential upside if 
the companies benefit from the plan.

The turmoil in Washington comes amid great upheaval in the nation's 
financial system.

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 crisis stems from 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 have 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.