- Ordinary citizens worried about being able to payback the loans and repay the mortgage are outraged that no one cares about them, and everybody is instead worried about some Wall Street gents who already have too much money. How does a collapse affect the ordinary Joe on the street ?
1. Tainted assets means that banks are unsure about the value of assets they hold, and make it more difficult for them to estimate their losses; this in turn causes a loss in confidence about the financial status of the bank and prevents the bank from being able to get capital – this in turn will surely and steadily lead to the bank going down the disaster bank
2. It is not just Wall Street that is affected, mainline banks in which Americans hold their deposits, are getting affected
3. The finance sector is so closely integrated with the overall economy (and is in fact a major glue of the whole economy); a crash will bring the economy down to its knees
4. People do not realize, but they are heavily involved with the stock market. Pension funds and retirement plans are typically heavily invested into the market, and downturns in the market affect the overall value of these funds

- Republicans believe that the Government needs to be small,and the market should be free. Such a bailout plan is likely to reverse both of these concepts, and this is a matter of principle
However, right now the US economy is on a major precipice, and it badly needs sentiment to be reflected. The overall aim of any ruling structure is to take measures such that it improves the life and condition of citizens, and the current situation is that a recession needs to be avoided and the economy is brought back from the brink (as stated by any number of economists and finance experts).

However, in a major setback to the President, and to the leadership of both parties, a majority of Congressmen rejected the bill. It is the treasury secretary who is responsible for ensuring that the economy remains purring, and he (and a number of experts) believe that such a plan is necessary to prevent the economy from going into a severe crisis; unfortunately a majority of the elected representatives don’t agree.

Wachovia Corp.’s suitors may use a template honed by JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon last week: Wait to see whether regulators will seize the bank, then buy the best assets and let the government sort out the rest, according to analysts. The bidders may try that tactic again at Charlotte, North Carolina-based Wachovia following its 27 percent plunge in New York trading yesterday, according to analysts at Goldman Sachs Group Inc. and Egan-Jones Ratings Co. They may get help from regulators, who said the U.S. benefited from seizing and selling WaMu because the Federal Deposit Insurance Corp. didn’t have to tap its $45 billion insurance fund.
Wachovia dropped $3.70 to $10 in New York Stock Exchange composite trading yesterday and lost $1.50 more in extended hours. Yields on Wachovia’s bonds soared to 24 percent, from 7.5 percent on Sept. 5, an indication that investors are concerned about default. Analysts questioned Wachovia’s ability to stay independent after seeing loan losses tied to WaMu. JPMorgan is taking on $176 billion in mortgage-related assets and taking writedowns of about $31 billion, the New York bank said. Some of those were option ARM loans, which are prone to default because they let borrowers defer some interest and add it to the principal.

Given that Wachovia also has huge exposures to mortgage loans, other banks are licking their chops at the sidelines, waiting for the Bank to run into more problems, and begin the downward spiral of liquidity problems -> credit problems -> credit rating downgrades -> unable to raise funds. And given the financial deal to take on the massive bad mortgage assets of depressed companies is under active discussion among the politicians, but no immediate solution yet seems to be coming out, sentiment will only go worse.

The United States plans to shift about $230 million in aid to Pakistan from counterterrorism programs to upgrading the nation’s aging F-16 fighter jets. The new government is facing “a terrible financial crisis with food and fuel problems,” the official said, and the Pakistani government “would rather tell its public they are spending their money on food and fuel,” so it asked the United States to pay for the F-16 upgrades from the U.S. aid fund. Last year, Congress mandated that $300 million in aid to Pakistan go toward fighting al Qaeda and the Taliban, partly by beefing up law enforcement and developing tribal areas of the country that are hostile to the United States.
Skeptical lawmakers worry that the F-16 upgrades will divert funding from crucial counterterrorism programs and could be more about helping Pakistan competing with its rival, India, than fighting terror. Nita Lowey, chairwoman of a House subcommittee on foreign operations, said the request from Secretary of State Condoleezza Rice to reprogram the funding “raises serious concerns.” Lowey is asking for more information before signing off on the change. “Congress provided these funds specifically for counterterrorism and law enforcement activities,” Lowey said in a written statement.

This is about as short-sighted as can be. It is of critical importance that funds be spent on improving the lot of the tribal areas and improve the force that works over there. Instead, if these funds are used for improving F-16′s, machines that are hardly of much use in anti-terrorism except when a force needs the support in a head-on fight with the terrorist, not something that is typically seen in the border regions.

Though Attorney General Alberto Gonzales announced his resignation Monday, he is still is in the crosshairs of investigations by Congress and his own department. A letter sent to Senate Judiciary Chairman Sen. Patrick Leahy, D-Vt., from Justice Department Inspector General Glenn Fine Thursday indicates that Gonzales is the subject of at least three separate ongoing internal investigations.
“The OIG is conducting a joint investigation with the Department’s Office of Professional Responsibility into allegations regarding the removal of certain United States attorneys and improper hiring practices. We believe that through those investigations and other OIG reviews we will be able to assess most of the issues that you raise in your letter,” Fine wrote.
Gonzales’ past testimony differed from accounts of former Deputy Attorney General James Comey and FBI director Robert Mueller, who both stated that in March 2004, Gonzales, then serving as White House counsel, visited Attorney General John Ashcroft while he was hospitalized, seeking reauthorization of a controversial National Security Agency surveillance program.

Given that the Bush Administration is not likely to change course and admit that its actions are wrong, or that the firing of the attorneys was not politically motivated; and that Congress has now tasted blood in terms of getting Gonzales to resign, it is likely that they will continue the investigation. Since he is now no longer Attorney-General, the investigation will be easier. Further, this probe by the Inspector General will also help the case of Congress in their dispute with the Bush Administration.

Embattled Republican Sen. Larry Craig resigned his seat Saturday after a weeklong political maelstrom triggered by revelations he was convicted of soliciting sex in an airport bathroom stall. Amid unceasing pressure from his party’s leaders, the 62-year-old Idaho senator said he feared fallout from the scandal would not allow him to “devote 100 per cent of the time and effort” to his job.

Political analysts say the scandal involving Craig was magnified because he was convicted of a crime and kept silent about the incident. “It is a truly remarkable thing that politicians get in trouble this way all the time — thinking they can keep quiet negative information about themselves,” said Cal Jillson, a political scientist at Southern Methodist University in Dallas.
“But with so much scrutiny on top level politicians, it was bound to come out … It’s fairly clear to people that he did enough that he thought he needed to plead guilty.”

The last line is the important part. There is so much politics and so much focus on the politicians that any indiscretions, however small, gets magnified. Politicians are supposed to be clean, but they also come from society; there would hardly be anyone in society who is as lily-white as a politician is supposed to be. After all, American society has a fair amount of second and more marriage, there are high divorce rates and people living alone, and there are a number of children being born outside marriage. When these are accepted among society, it seems scary that politicians are supposed to come into politics and stay there keeping totally clean all the time.
With these kind of expectations, it would seem normal that there would be a large number of prospective politicians who do not have such a clean family life, but are otherwise good administrators and would be good for the country; but who will stay out of politics because of these very reasons. The hounding a determined media can give to a person accused will be enough to shake the convictions of even a determined person. It would be far better if the media focuses on effective administrative policies; the amount of pork-barrel and corruption in Congress would be a far better judge of how good a politician is.

The most important thing to remember about the drowning of New Orleans is that it wasn’t a natural disaster. It was a man-made disaster, created by lousy engineering, misplaced priorities and pork-barrel politics. Katrina was not the Category 5 killer the Big Easy had always feared; it was a Category 3 storm that missed New Orleans, where it was at worst a weak 2. The city’s defenses should have withstood its surges, and if they had we never would have seen the squalor in the Superdome, the desperation on the rooftops, the shocking tableau of the Mardi Gras city underwater for weeks.
The real culprit was the U.S. Army Corps of Engineers, which bungled the levees that formed the city’s man-made defenses and ravaged the wetlands that once formed its natural defenses. Americans were outraged by the government’s response, but they still haven’t come to grips with the government’s responsibility for the catastrophe.
Many of the same coastal scientists and engineers who sounded alarms about the vulnerability of New Orleans long before Katrina are warning that the Army Corps is poised to repeat its mistakes—and extend them along the entire Louisiana coast. If you liked Katrina, they say, you’ll love what’s coming next.

A lot of this discussion just does not get heard. With a presidential election in full swing (albeit very early), most of the discussion is about the swinging fortunes of the candidates, or about the latest act of famous starlets, or about the genuineness of the record home run baseball hitter. All this time, a lot of scientists are screaming about what the reconstruction of New Orleans is not doing.
The basic thrust of the article is: New Orleans is on a place where river sediment carried by the Mississippi would create some elevated areas, and at the same time, there would be a barrier of wetlands, mangroves and swamps that would reduce the thrust of a hurricane. However, since the Corps over a period of time carried out a series of steps to regulate the river, sedimentation was reduced; further activities had a major impact on causing a slow destruction of the wetlands and also let the Gulf expand way inwards. And in an ominous conclusion, the claim is that the further plans of construction of a large number of leeves all along the coast will cause further destruction of the wetlands. And the elected representatives are more interested in pork, or diverting money to electorally appealing projects. Such an article should be debated, if only for the sake of the number of people who dies in the flooding after the storm.

In recent weeks, the administration and congressional Republicans pressed for the change in response to what it called a dangerous gap in surveillance capabilities. This was triggered by what news reports say was a ruling by a judge that the government had exceeded its authority in surveillance of communications overseas passing through electronic centers in the United States.

The legislation authorizes for six months the National Security Agency to intercept, without a court order, communications between people in the United States and foreign targets overseas. The Bush administration would have to demonstrate to a special court that a surveillance request only targeted individuals outside the United States. Under existing law called the Foreign Intelligence Surveillance Act (FISA), the government must obtain court approval to conduct surveillance of suspected terrorists within the United States.

The biggest concern raised about this law is about whether this is an acceptable intrusion into the privacy of citizens in the US communicating with people abroad. How many people would appreciate that their liasions, their business deals, their intimate contact, etc, can all be easily listened to now without the need for a court approval, just depending on the concerned spy agency to ensure that their privacy is not being invaded.

The FBI broke the law when it searched Rep. William Jefferson’s Rayburn office in May 2006 and viewed legislative documents, the D.C. Circuit Court of Appeals ruled today. The court ordered the Justice Department to return any legislative materials taken as part of a corruption investigation of the Louisiana congressman, but allowed it to hold on to documents unrelated to legislative matters.
While the search itself was constitutional, the court said, the FBI overstepped its bounds in taking privileged legislative materials.

A split decision, which nonetheless allows the FBI to raid the office in pursuit of a criminal investigation, but at the same time asking the FBI to return legislative material. This is actually a decision worthy of being made by a politician, since it tries to keep everyone happy except for Rep. William Jefferson.

The Senate approved the Bush administration’s plan to remove a legal obstacle to eavesdropping on overseas terror suspects, putting pressure on the U.S. House to accept it before leaving for an August recess. President George W. Bush demanded that Congress close an intelligence gap that he said was hobbling the capability of U.S. spy agencies to eavesdrop on terrorists.

A proposal by House Democrats to fix the problem failed today to obtain the two-thirds margin required after McConnell said it “would not allow me to carry out my responsibility to provide warning and to protect the nation.” The measure, like the Democratic alternative in the Senate, would have required a court order to authorize interceptions of e-mails and phone calls of foreign-based terrorists routed through U.S. telephone switching points. In the Senate-passed measure, the secret court that oversees surveillance would have a more limited role. The court would review the program to ensure it was adhering to guidelines drafted by the attorney general and the national intelligence director to ensure Americans’ privacy is protected.

In essence, the Republican version loosens a fair amount of the controls. Now, one knows that the threat is real, but it is never very clear whether the administration is going overboard in its attempts. This measure now goes to the House, but if it cleared the Senate, it is much more likely to pass the House. After all, it has been the Senate in the past that has done a lot of cross-questioning in the past, not the House. With this measure, one can only hope that the administration still respects the right to privacy.

The White House offered a vigorous defense of Attorney General Alberto R. Gonzales yesterday, insisting that he had not given misleading testimony to Congress, but that national security factors prevented further clarification for now. “He has testified truthfully and tried to be very accurate,” the chief White House spokesman, Tony Snow, said of Gonzales’ testimony this week before the Senate Judiciary Committee.

Mueller’s account appeared to conflict starkly with Gonzales’ version of events, in which he told the Senate Judiciary Committee that there was no disagreement about the program. In insisting that there was no real contradiction, Snow said Gonzales was just not able to explain further “because to do so would compromise American security.”

In essence, what the White House is saying that the attorney general was speaking the truth, that you folks should not read too much about the difference in testimony between his testimony and that of Mueller, and anyway, it is all your fault since you knew that he would not be able to say much due to the need for secrecy, and you folks should have understood that.
When it has been clearly shown that he was speaking a lie and perjuring himself, the concept that a defense based on ‘trust us, we are speaking the truth’ will work shows how far the White House is from reality. This is likely to make members of Congress more likely to try and appoint a special prosecutor to investigate the attorney general.