Bailout failure 'will cause US crash’ (Euroweenies trying to scare US)

UK Telegraph ^ | 9.27.08 | By Tim Shipman in Washington and Edmund Conway

[BurbankKarl]

The financial system could face a meltdown of 1929 proportions unless US politicians succeed in their efforts for a $700bn rescue scheme, experts added.

The warning came as Republicans and Democrats met in Washington for a rare weekend debating session to attempt to seal agreement on the contentious plan, aimed at preventing a long-lasting recession in the US.

Officials close to Paulson are privately painting a far bleaker portrait of the fragility of the global economy than that advanced by President George W Bush in his televised address last week.

One Republican said that the message from government officials is that “the economy is dropping into the john.” He added: “We could see falls of 3,000 or 4,000 points on the Dow [the New York market that currently trades at around 11,000]. That could happen in just a couple of days.

“What’s being put around behind the scenes is that we’re looking at 1930s stuff. We’re looking at catastrophe, huge, amazing catastrophe. Everybody is extraordinarily scared. It’s going to be really, really nasty.”

Investors fretted about contagion into Europe, where Fortis, which was part of the consortium that bought ABN Amro last year, fired its chief executive after liquidity concerns pushed shares down more than 20pc to a 14-year low. Holland’s ING and BNP Paribas are looking at buying the bank this weekend.

London investors have warned that the FTSE could suffer falls of as much as 1,000 points - a fifth of its value, if the deal falls through.

[AZLiberty]

I'm beginning to see a possible crash as a new American Revolution. The U.S. political system is broken, along with the education system, the legal system, the healthcare system, and now the banking system. Led by Henry Paulson (I wish it were Pat Paulsen), the world's bankers are asking for $700B (for now) to put a patch on a broken system.

Perhaps we should let the system collapse, let the bankers go bankrupt, and start over. I'm ready to read Atlas Shrugged again.

[at bay]

OooooooooooH! Bold type! Now I’m really scared! Time to run for the hills! The ship is sinking and yet the band blogs on!