THIS MORNING, A GLOBAL RESPONSE–CNN REPORTS

Federal Reserve, joining central banks worldwide, cuts key interest rate by half percentage point to 1.5 percent.

RIOT IN HONG KONG: AFP-— Furious investors clashed with police outside Bank of China’s Hong Kong headquarters Wednesday and demanded the repayment of investments linked to failed US bank Lehman Brothers

Scuffles erupted outside the Bank of China building, as protesters tried to push through the police’s barricade, an AFP photographer at the scene said.

Hundreds of protestors also swarmed other major banks and the city’s legislature, grabbing lawmakers and demanding help to recoup their money.

The protestors, who complain that the banks which sold them the so-called “mini-bonds” had not fully explained the risks involved, held placards and shouted slogans to demand a full refund of their investments
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HORSEMAN OF THE APOCALYPSE: Ambrose Evans Pritchard of the Telegraph in London:

During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. The Netherlands has just rushed through a second, more sweeping nationalisation of Fortis. Ireland and Greece have had to rescue all their banks. Iceland is facing an Argentine denouement.

The US commercial paper market is closed… The interbank lending market has seized up….. Healthy companies cannot roll over debt….

As the unflappable Warren Buffett puts it, the credit freeze is “sucking blood” out of the economy. “In my adult lifetime, I don’t think I’ve ever seen people as fearful,” he said.

We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, and even that may not be enough….

THE POINT OF NO RETURN?
FED TO PUMP MORE MONEY INTO MARKETS, MAY CUT INTEREST RATES AGAIN
MANY AMERICANS FEAR A DEPRESSION

THE DEBATE: YIKES, IF THATS WHAT IT WAS

David Swanson liveblogged for those who may have mercifully missed it:

McCain v. Obama II: The Empire Strikes Back

The first debate after the great foreign policty debate, which focused
almmost exclusively on war, shifted to a discussion devoted in large
part to foreign policy and specifically war. But it began with some
other topics.

8:55 p.m. This can’t be good. PBS aired a program on the evolution of
dinosaurs just prior to the debate, showing no consideration for the
widespread belief that, yes, John McCain is a dinosaur and that his
running mate believes he walked the earth together with humans.

9:01 Pundits get the first and last word and begin by saying almost
nothing. Obama has to not be “too professorial.”

9:02 Brokaw says Gallup chose 80 uncommitted voters from Nashville. Are
people who don’t know who to vote for and live in Nashville
representative of the whole country? Is Gallup? Is General Electric’s
Brokaw? We shall see.

Click on the link above for more.

STEVEN PEARLSTEIN IN THE WASHINGTON POST: NOTHING NEW BY EITHER CANDIDATE ON THE CRISIS

Against a backdrop of an unfolding meltdown in global financial markets and the near-certainty of a U.S. recession, the two candidates for president used the occasion of a much-anticipated town hall meeting last night to repeat all the talking points they were making long before the recent bank failures, the free fall of stock prices and the federal government’s expensive rescue efforts.

SURGE OR SPLURGE?

J HARI (ICH)McCain Is Deluding Himself (and the Public) Over The ‘Surge’

John McCain is desperate to talk about the surge rather than the splurge. His Iraq war is set to cost one trillion dollars, and his deregulation-mania has cost hundreds of billions.

BASHING OBAMA: THE BLOOD SPORT OF REPUGS

I would like to do more on the bashing of Obama, he reversion to form by the Repugs who can’t really explain or defend the policies that led to the financial crisis and seem to prefer modern forms of Red baiting –(oldest tactic) to tarnish Obama with guilt by association with Bill Ayres et. al.

I am fascinated by the fact that Mayor Daley of Chicago defends Ayers who, by the way I know, and know as someone who has worked to promote innovation in a failing Chicago public schools system. Of reporting on the GOP gotcha smear tactics—which seems all they have left—CNN showed a pamphlet for a Peace School in Chicago. What a crime! It was pathetic reporting, Anderson, pathetic, driven by a National Review operative.

And what hypocrisy! Bill Ayres may have had a hand in blowing up bathrooms but McCain was blowing up people in an illegal and immoral war which CNN didn’t have the guts to mention. (He also backed the Contras in Nicaragua!) At least they reported that Ayers and his wife Berardine had the charges dropped against them. Since there was no war crimes tribunal after the war, McCain couldn’t be brought up on charges of his crimes against humanity. Yes. Folks, that’s what they were. He was shot down while bombing civilians in Hanoi. Yup, You betcha. Wink, Wink.

FED IS SADDLING UP

Now, on to the decline and fall of our economic system. Last night a CNN poll showed 6 out of ten people said they expect a depreression, thats with a D.

The Fed says it is is coming to the rescue, injecting more billions and planning another rate cut. Bear in mind that the SEVEN previous cuts and the earlier injection of billions up on billions DID not solve the problem. Ben has a limited number of tools in his arsenal.

WASHINGTON - Federal Reserve Chairman Ben Bernanke warned Tuesday that the financial crisis has not only darkened the country’s current economic performance but also could prolong the pain.

The Fed chief’s more gloomy assessment appeared to open the door wider to an interest rate cut on or before Oct. 28-29, the central bank’s next meeting, to brace the wobbly economy.

Bernanke said the Fed will “need to consider” whether its current stance of holding rates steady “remains appropriate” given the fallout from the worst financial crisis in decades.

MARKET REACTS: NYT: The Dow skidded after the Federal Reserve chairman said that the outlook for economic growth had worsened.

AP: - Wall Street has had yet another dismal day, extending its heavy losses as investors’ worries about the financial sector wiped out early enthusiasm over the Federal Reserve’s efforts to inject confidence into the credit markets. Trading remained fractious and grew more turbulent in the last hour, with the Dow Jones industrial average losing more than 500 points and all the major indexes falling more than 5 percent.

RETIREMENT FUNDS HAVE LOST 2 TRILLION DOLLARS, EXPERTS SAY

Fed to Purchase U.S. Commercial Paper to Ease Crunch (Update1) By Craig Torres

Oct. 7 (Bloomberg) — The Federal Reserve will create a special fund to purchase U.S. commercial paper after the credit crunch threatened to cut off a key source of funding for corporations.

The Treasury will make a deposit with the Fed’s New York district bank to help set up the special purpose vehicle. The central bank will also lend to the program at policy makers’ target rate for overnight loans between banks. The Fed Board invoked emergency powers to set up the unit, the central bank said in a statement released in Washington.

Today’s action follows a slide in the commercial-paper market to a three-year low of $1.6 trillion last week as investors fled even companies with few links to the subprime mortgage crisis. Companies from newspaper firm Gannett Co. to electricity producer Southern Co. have been forced to tap credit lines or forego raising debt because of the market’s disruption.

House gives nod to boost for SEC enforcement authority The House last month passed a bill that would expand the Securities and Exchange Commission’s enforcement authority.

BANKS NOW INSOLVENT, EXPERT CLAIMS

Willem Buiter has a penchant for ruffling feathers with his blunt pronouncements. He caused a firestorm at the Fed’s recent Jackson Hole conference by, in his presentation, telling the central bank that it was a victim of “cognitive regulatory capture” and was excessively sensitive to the needs and special pleading of the financial services industry. Even though the hosts took umbrage, they should not have been surprised, since Buiter had been saying that sort of thing for months.

Buiter lobbed another bombshell today, but because it was presented on his blog and (needless to say) the market meltdow was attention-grabbing, it appears to have gotten little note:

It’s reasonable to assume that the banking system in the North Atlantic region is insolvent and would be bankrupt but for the reality of recent government bailouts and the expectation of future government bailouts. Certainly, for the system as a whole, the marked-to-market value of its assets is way below that of its liabilities. I strongly suspect that even the hold-to-maturity value of its assets is well below that of its liabilities. Although the system as a whole is broke, there are no doubt individual banks that are solvent. We may not, however be certain as to which banks are solvent and which banks are not. (FROM NAKED CAPITALISM)

French Premier Francois Fillon: We’re on “The Edge of The Abyss” By Mike Whitney

People are scared and removing their money from the banks and money markets which is intensifying the freeze in the credit markets and driving stocks into the ground like a tent stake. Meanwhile, our leaders are “caught in the headlights”, still believing they can “finesse” their way through the biggest economic cataclysm since the Great Depression. It’s madness.

MICHAEL J KOZARES (SEEKING ALPHA)

You get a sense that America’s chickens have come home to roost. Instead of learning from our past mistakes though, as the idiom above is meant to suggest, the nation appears intent on compounding them. The Great American Bailout of 2008 is simply more of the same — more debt, more easy money, more moral hazard, more taxpayer responsibility, and more government intervention. Quite literally, the government has once again applied a band aid, papered the problem over and delayed once more what will certainly be an even worse day of reckoning. Yes, the chickens have come home to roost, but for all the roosting all we have gotten is more chickens.

WHAT GEORGE SOROS THINKS ABOUT THE CRISIS

REUTERS: CHINA FEELING IT TOO

Many of China’s richest people grew a bit poorer this year as stock and property markets tumbled, but the country’s wealthy are riding out the downturn better than many of their foreign counterparts, a survey showed on Tuesday.

Real estate heiress Yang Huiyan, 27, saw her estimated fortune shrink to $4.9 billion from $17.5 billion as the market value of her stake in property developer Country Garden Holdings Co plunged, according to the latest annual Hurun Report, which ranked the country’s 1,000 richest people.

That pushed Yang, who ranked as China’s richest person last year, down to number three, said the report, compiled by researcher Rupert Hoogewerf.

WHATS NEXT? SPECIFIC TALKS ABOUT SPECIFIC PLANS FOR MARTIAL LAW AND A POLICE STATE

STUNNING EMAIL FROM CATHERINE AUSTIN FITTS TO MEMBER OF GOLDMAN SACHS RESEARCH TEAM–THIS SAYS IT ALL!!

FEELING A LITTLE CHALLENGED BECAUSE OF YOUR UNDERSTANDING OF ECONOMICS? WANT TO HAVE SOMEONE EXPLAIN THE CURRENT FINANCIAL CRISIS IN REALLY SIMPLE TERMS? THEN YOU MUST LISTEN TO THIS INTERVIEW WITH CHRIS MARTENSON

Meanwhile back on Wall Street, I joined a union rally last week protesting the bailout and talked about the need for a JAILOUT, not just abailout. (This is an issue I explained in more detail earlier Tuesday on NPR’s ON POINT program with Tom Ashbrook. You can hear the podcast no on line: www.onpointradio.org/

We did a video of just another day on Wall Street. Check it out:

PEOPLE IN THE STREET

We sent our producer, the filmmaker (and taxpayer) Ray Nowosielski over to Times Square Friday to get some reaction to the bailout passing. He also paid a little visit to Morgan Stanley, whose building was across the street from the old Globalvision office. Here’s his video report:

Miami Herald: Homeowners Get Some Relief

Oct. 7–Countrywide Financial will provide Florida homeowners up to $1 billion in mortgage relief under a settlement reached with the state’s attorney general over alleged abusive lending practices. ||Countrywide, once the largest home loan company in the country, was acquired in July by Bank of… Read more

NJ May Bill Mortgage Lenders $2,000 Per Foreclosure by AFU

TRENTON, New Jersey, Oct 6 (Reuters) - A panel of New Jersey legislators on Monday approved a measure to make mortgage lenders pay $2,000 before taking a homeowner into foreclosure. It joins a growing list of local and national efforts to stem a tide of home foreclosures.