Updated for DOW mark

The " Emergency Economic Stabilization Act of 2008", 451 pages in all.

I've now read and digested the entire "Bailout Plan" drafted by; a).Congress b). An army of attorney's c). An equal size army of lobbyist and special interest groups, and d). Congressional members these attorney's represent.

Not only did I read the whole thing, I read all the documents, laws, statutes, titles, parts, subparts, chapters, subchapters and references the document sites throughout it's pages.., Oh God.., that was truly painful.

What I got out my days long efforts was that this piece of legislation is a real hornets nest, a complete mess. Frankly, I'm genuinely surprised anyone would put their name on this thing.

It's garbled, extremely vague, has been written, rewritten and rewritten again. It has been revised, revamped, redone and resubmitted. It has phrasing that "strike" out several previous pieces of legislation, laws and legal safeguards once considered invaluable.

It begins by stating it's purpose.

The main "purpose" of this legislation is the creation of a new program called the " Troubled Assets Relief Program" -- now nicknamed " TARP" -- and the administrative infrastructure to manage it and carry it out, the Office of Financial Stability This program has a quite a few sections to it's legal TITLE's. Section 1 through section 303.

First, we have to identify the all players, places and organization in this Bailout legislation program that are important and that have power. There are potentially thousands of personnel that will be involved -- mainly administrative workers --, but only a handful are truly important.

Organizations:

1. Board of Governors of the Federal Reserve System
2. Congressional Budget Office
3. The Joint Committee on Taxation
4. FDIC
5. U.S. Department of Treasury
6. Committee on Banking, Housing, and Urban Affairs
7. U.S. Committee on Finance
8. Committee on the Budget
9. Committee on Appropriations of the Senate
10. Committee on Financial Services and See Link:
11. Office of Financial Stability - To be Created
12. U.S. Government Accountability Office

People:

1. President George W. Bush
2. Henry M. Paulson, Jr.
3. Robert M. Kimmitt
4. Neel Kashkari
5. Barney Frank
6. Ben S. Bernanke
7. Chris Dodd
8. John M. Spratt Jr.
9. Robert C. Byrd
10. David M. Walker
11. Gene L. Dodaro
12. Investment Company Executives
13. Comptroller General -- Interim To Be Replaced or Confirmed by Appointment.
14. Special Inspector General -- To Be Appointed

Places:

1. Wall Street
2. White House Congress
3. Lobbyist Firms Around the Country/Globe
4. Treasury Offices

Now that the playing board is set with player pieces, places and organizations, let's begin.

The exact same Secretary of the Treasury -- Henry M. Paulson, Jr. -- who was suppose to keep us out of these types of financial collapses by proper regulation -- will be appointed as the primary oversight individual of the workings of the Act. The Act also calls for consultation oversight to determine what is to be purchased with the Chairman of the Board of Governors of the Federal Reserve System, currently Ben S. Bernanke.

Ben S. Bernanke, Donald L. Kohn, Kevin M Warsh, Randall S. Kroszner and Elizabeth A. Duke, are the current board members of the Governors of the Federal Reserve System that serve under Bernanke. The Act provides a Sections for "conflicts of interest" -- in section 108 and other places -- to keep conflict scenarios from happening.

However, since the bill begins with it's first action being a conflict of interest, -- the same people doing same thing -- it's immediately difficult to digest for the average American.

Although several sections describe all sorts of ways to limit Paulson's influence and power, it also all but removes many limitations by providing clauses which "stay" the power limitations. Paulson himself also has discretion to enact many of these same clauses. Essentially, Paulson was legally given a blank check anyway's. He literally oversees almost everything with nearly unlimited power.

As far as Executive Compensation is concerned -- "Golden Parachutes" -- , it was suppose to limit that too. However, to condense what all the legal mumbo jumbo says in the Act it comes down to this. That too is under the discretion of the Secretary of the Treasury -- Paulson -- to a some degree, but not totally. Congress has authority here too. Essentially, if the organizations that initially held the bad debts -- banks/mortgage companies/ investment firms -- are turned around financially by the government, -- even if that's 2 years or more down the road -- then they might receive their "Golden Parachute" and executive compensation after all. It's not a guarantee, but there is a hole.

The initial value of the bad assets -- banks loans -- which we are purchasing as "The People", is evaluated and determined by guess who..? Ben S. Bernanke and company.

Here is another section of the Act that's a real concern. The term " swap". Although mentioned in only one line of text within the Act, this provides that all debts related to the "swaps" will be paid, and pretty much leaves it there.

Carefully stashed away in Section 5, REPORTS, subpart C, subchapter 1. b., is a little tiny, itsy bitsy mention to what brought most of this debacle down upon us all.., " enhancement of the clearing and settlement of over-the-counter swaps;"

Let me explain this legal terminology and trickery that are.., " swaps".

When you make a deposit in a bank, that money is insured. All monies or assets that are insured, and or are traded on the stock market -- any insurance policy -- are subject to government regulation and oversight.

When all of these bad mortgages were piled up into investment packages for Wall Street firms to buy, sell and trade, they had a level of risk associated with them. That sort of risk is normally "insured" and, that insurance policy would then be under government regulation and oversight on the trading floor. That didn't happen in this case.

In these contracts, the word "insured" was replaced by our good lobbyist friends and special interest attorney's with the word "Swap". That allowed the contract to legally not be an actual "insurance policy" Therefore -- and this is important -- they were never subject to government regulation at all. They modified the word so these "swaps" -- insurance policies -- supporting these bad loans wouldn't be regulated whatsoever.

Why? Because when insurance policies are regulated by the Security and Exchange Commission they must be backed by a real asset. Other money, other assets, other holdings.., something must be there to insured the policy is financially backed. If the backing isnt really "real", would that qualify as actual "leverage"? NOT!

When the lobbyist attorney's renamed these policies "swaps" in early 2000, they assured their clients that they would never have to show a single asset to backs these insurance policies that are suppose to guarantee they would be paid if all hell broke lose. Well, all hell broke lose and guess what? These swaps were not worth the paper the were traded on and so the "insurance policy" that could have, and normally does prevent a collapse of this sort, were also worthless.

Paulson and all the other fiancial players knew this, and have for awhile. If the Secretary of the Treasury doesn't even know this, then who would? Did not others in the financial market know of this situation? Of course they did.

So why don't they put into place someone to oversee Paulson in this legislation? They did. This person also has a position of great power. This position carries the title of, Comptroller General. This appointed position has a good deal of power by having the capacity to uncovering past discretions, investigating just about anything and anyone, and can request just about any form of information relating to this financial crisis. Won't happen.

Last February 16, 2008 David M. Walker resigned as the Comptroller General after years of repeated run-ins with president Bush and his administration, military leaders in charge of Iraq and both sides of of the isles of Congress. He attempted, but failed to rein in government spending, He has been temporarily replaced by Gene L. Dodaro -- appointed by Walker -- and must wait to see if he stays. This position is actually appointed, and by guess who? President Bush, who else -- pending Congressional approval.

So, what about accountability? Is someone going to jail? Let's see...

Sec. 127. Cooperation with the FBI

"Any Federal financial regulatory agency shall cooperate with the Federal Bureau of Investigation and other law enforcement agencies investigating fraud, misrepresentation, and malfeasance with respect to development, advertising, and sale of financial products."

That's it? It goes after bad advertising agencies and scam artist that use the FDIC logo on their store window that aren't really a FDIC insured institution, and that's it? That's tough oversight? Everyone simply walks free as the result, amazing! Not only will they walk free, but also may still get their bonuses sometime in the future. For God sake, $700,000,000,000.00 to do that?

Neel Kashkari -- who, on October 6, 2008 -- was appointed as the Interim Assistant Secretary of the Treasury for Financial Stability by Henry Paulson, will now head the financial reconstruction effort. He will maintain his former position as Assistant Secretary of the Treasury for International Economics and Development at the same time. This 35 year old was a former Vice President at Goldman, Sachs & Co. in San Francisco, where he led Goldman's IT Security Investment Banking practice. The is the same firm that also, recently failed.

Seems the "youth and inexperince" arguement isn't considered when talking within the corridors of Wall Street. Can a 35 year old Interim Assistant send the entire financial world the message, "We got our best man on it"?

If I were in his position, I would be aweful careful that I wasn't being used as the "fall guy" for this whole thing sometime in the near future. Echo's of Colin Powell's UN speach -- little white bottle of stage prop anthrax in hand -- claiming WMD's, come to mind.

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Monday, I had forecast the close at approximately 9,200. It close at 9,955.50. I was off by about 650 points.

Tuesday my call was between 9,100 - 9,300 ( basically 9,200). It closed at 9,447.11. This time I was off by 150 - 350 points.

My mid week forecast -- today Wednesday -- was 9,200 exactly. It closed at 9,258.10. Now I'm only 58.10 points off.

Thursday, my call was 9,300. I thought lifting the ban on short sales would stabilze the market for at least a day. Turns out investors took all teh profits they could and ran at the end.

My Friday afternoon forecast is at 8,970 points. I think it's going to be even worse than I had anticipated. WOW!

Firdays tend to be big profit taking days right before teh weekend. Tomorrow will be VERY VERY BAD.

Some still -- not me -- are even speculating the market could tank to around 8,000. I don't see that happneing, as the numbers don't add up.

One of the nicest things to all this -- if there could be a nice thing -- is that much of the real estate that is being estimated low, is estimated too low. It's my belief there will be a rather significant boomerang effect in the value of homes in many markets, but not all.

Those markets that have maintained stability in the last 6-7 years -- outside of the state of Texas, because Texas made subprime loans illegal -- will most likely fall to some degree as their value isn't real and hasn't adjusted down yet. Everything else should go up.