Emergency Edition: Wall Street Meltdown
by Martin D. Weiss, Ph.D.Dear Edmund, Our nation is suffering through a financial emergency, and I wanted to make sure you get this urgent message now, before it's too late. Right at this moment, in an attempt to prevent a Wall Street meltdown from beginning as soon as Monday, Congress is locked in a last-ditch effort to produce a bailout package before Sunday evening when Asian markets open. Whether they succeed in their weekend endeavor or not, three things are crystal clear: 1. The U.S. credit engine is already melting down. In fact, just this week, the all-important market for short-term commercial paper has come to a virtual standstill. This is precisely the market we warned you about. Now it's collapsing. And if this pattern continues, it's likely to drive many corporations that depend on this instant cash into instant bankruptcy. 2. Although a massive federal bailout might help rally the stock market temporarily, it is not — and will not — reverse the credit meltdown. 3. Quite to the contrary, fear is now spreading throughout the banking industry, driving many Americans to pull their money out of the financial system entirely. Yes, it makes sense to shift from weak to strong institutions, and that's rational. But the behavior we're beginning to witness is both irrational and dangerous. Here's what we are doing. First, as a follow-up to our white paper submitted to Congress this week, "Proposed $700 Billion Bailout Is Too Little, Too Late to End the Debt Crisis; Too Much, Too Soon for the U.S. Bond Market," we are recommending that Congress focus less on bailing out imprudent institutions and more on fortifying the safety net of individuals caught in failed financial institutions. Some urgent steps include: - Fully fund and staff the Federal Depositors Insurance Corporation (FDIC) to better prepare for the possibility of multiple bank failures occurring at the same time.
- Close major gaps in the coverage provided by Securities Investors Protection Corporation (SIPC) to help make sure investors are not denied access to their accounts when they need to liquidate their securities in a falling market.
- Seriously consider federal insurance to cover policyholders in failed insurance companies.
Our major point to Congress: These actions cannot wait. Just this week, data from Office of Thrift Supervision (OTS) shows that Washington Mutual suffered panicky withdrawals averaging $2 billion per day over the past eight business days. Now, in order to help prevent the spread of panic among bank, brokerage and insurance company customers, firm and swift action is needed to sew up the holes in our nation's existing safety nets. Second, we have taken steps to help you find safety. For all the details, we hope you didn't miss out 1-hour educational video, "The X List." Third, we are doing everything we can to help you go on the offensive to convert this massive crisis into a massive profit opportunity. And with that goal in mind, we've just posted an updated report to our Website with specific instructions. We expect this massive crisis could come to a head very quickly, and we anticipate a Black October for the stock market. Click here now so you can act before then. Good luck and God bless! Martin | 
