Paulson reworks financial bailout: New targets for investment… even you can apply! Markets plummet… Bill Bonner on when stocks will be cheap enough to buy. OECD predicts global recession… Germany admits contraction has already begun. Wall Street CEOs forecast “rapid,” “deep” U.S. recession. Joel Bowman on a peculiar hissing sound emitting from the Middle East.

For an erudite debate over the Paulson doctrine, we turn to our friends at The Onion this morning:

The Money Hole.

It’s not any more complicated than that, is it?

Indeed, Paulson and company announced a TARP switcheroo yesterday. Now the Treasury’s Troubled Asset Recovery Program (TARP) is suffering a serious case of the STD “mission creep.”

Instead of purchasing troubled assets from banks, the Treasury,

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Stocks stage huge rally, but will it hold? Key levels to watch, and some historic perspective… Libor continues to ease; famous Wall Street CEO explains why credit still isn’t flowing… John Williams on the “true cost” of the U.S. financial crisis, with charts to prove it… Byron King with an “exploding” foreign resource market…. Plus, a stinging critique of I.O.U.S.A., and one thing you must do before voting Nov. 4.

The Dow logged its second best one-day point gain, 889 points, in its even more storied history yesterday:

Percentage wise, at 10.8%, the rally ranks sixth. The S&P and Nasdaq trundled alongside the old lady like puppies.

After finding a new “credit crisis” low on Monday, traders on Wall Street snapped back with vengeance. But it’s not the higher highs we’ll

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Source: Adrian Ash, Bullion Vault  10/17/2008
“What we thought was a wall of liquidity, turned out to be a wall of leverage.” – Paul Davies in the FT, quoting “a number of senior bankers…”

WANNA KNOW WHY your stock market shares keep on tumbling, right back to what one Fox news anchor just called “the absolute lows” from the end of last week?

It’s credit – or rather, the lack of it.

The US bail-out, European unity, Gordon Brown’s sainthood, every new mortgage application…all these things now look incredible – quite literally unbelievable – against the stark backdrop of no credit, no leverage today. But nothing lacks credibility like trying to make fast money in finance right now.

Even David Einhorn, the baby-faced card sharp running Greenlight Capital, cost his clients more than 12% of their money last month. And he’s the guy who spotted and bet on Lehman Bros.’s looming collapse 14 months …

Warren Buffett, the “Oracle of Omaha” and head of Berkshire Hathaway Inc, wrote in the New York Times, “Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

The stock market is ruled by two emotions, Fear and Greed. Warren Buffet adds his bit of wisdom to that notion. He writes, “Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.” So in essence, he calls for a major investment into U.S. Stocks for long-term gains and added several U.S. companies to his personal portfolio.

Buffett appears to be maintaining his bullish view of railroads, a view that he has held since early 2007 when he first disclosed investments in the sector. In the short- to intermediate-term,

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U.S. stocks yesterday (Monday) staged their biggest rally since the Great Depression – with the Dow Jones Industrial Average soaring an all-time record 936 points – on a Federal Reserve-led push to flood the ailing global financial system with dollars and on a U.S. government plan to buy stakes in banks.

U.S. stocks yesterday (Monday) staged their biggest rally since the Great Depression – with the Dow Jones Industrial Average soaring an all-time record 936 points – on a Federal Reserve-led push to flood the ailing global financial system with dollars and on a U.S. government plan to buy stakes in banks. The rally was sparked by commitments from the major financial nations to cooperate in getting the credit markets functioning again, and by news that U.S. officials were putting the finishing touches on Washington’s version of a rescue plan under which the U.S. Treasury Department will invest an estimated $125 billion in nine major U.S. banks, and another $125 billion in smaller financial institutions, Bloomberg News reported early this morning (Tuesday). The White House announced that U.S. President George W. Bush would meet at 7:30 a.m. EDT today with members ...

On Monday, the heads of some of the nation’s largest banks were called to Washington in order to discuss the details of moving forward with the rescue package. Five CEOs sat in on the Treasury Department meeting, aimed at finalizing the government’s plan. Goldman Sachs’ Lloyd Blankfein, Morgan Stanley’s John Mack, Citigroup’s Vikram Pandit, JPMorgan’s Jamie Dimon, and Bank of America’s Kenneth Lewis were all in attendance. The result of the meeting should hopefully be a clearer picture of what Americans can expect to see over the next few weeks.

Let us hear your thoughts below:

In this feature, we turn our attention to General Motors (GM), Johnson & Johnson (JNJ), Wal-Mart (WMT), Chevron (CVX) and Home Depot (HD).

One of the hallmarks of this bear market has been how indiscriminate it has been.  Companies that are likely to be absolutely devastated by the economic slowdown are getting whacked almost as much as those that should do just fine.  To illustrate this, one needs go no further than the Dow 30.

Below we present the 30 blue chips sorted by how much they have declined over the last year.  All but one of them is down.  Yes, two of the firms that are likely to suffer the most are at the top of the list, General Motors (GM) and Citigroup (C).  However, the relative positions of many of the others simply

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As lawmakers continued to hammer out the terms of the Wall Street bailout on Friday, tragedy struck Washington Mutual, effectively making it the largest bank to fail in the history of American finance. The company was seized by the FDIC on Thursday, and its assets sold to JPMorgan & Chase for a sum of $1.9 billion. JPMorgan said it would write down WaMu’s loan portfolio by approximately $31 billion, though the decision could be subject to change if an agreement on the government bailout is reached, and the company chooses to take advantage.

With regard to the acquisition, CEO Jamie Dimon stated: “We’re in favor of what the government is doing, but we’re not relying on what the government is doing. We would’ve done it anyway.” The change now deems JPMorgan the second largest bank in the nation, trumped only by Bank of America.

Let us hear your thoughts below: