Economic Day In Review.....

It's clear that the optimism from last Friday has quickly given way to a no confidence vote for Treasury Secretary Paulson's plan.

Today's highlights:

• The Dow was down by 372.75 points but the big story is gold rising by $40 and oil rising by $15 per barrel to close at $120.
• Morgan Stanley has received approval to become a bank holding company and talks between them and Wachovia are on hold.
• Goldman Sachs received approval to become a bank holding company.

Giving Goldman and Morgan bank status basically allows them access to money through deposits, which would help manitain their liquidity needs.

Secretary Paulson and Fed Chairman Bernanke will be testifying before the Senate Banking Committee tomorrow. Here are some details of the plan for the plan, as I know it:

• Secretary Paulson is asking for $700 billion
  
• Original plan was to purchase non performing mortgage securities, but that appears to have changed to any type of non performing asset. It's unclear how they would determine if the price that they are paying for these assets is fair. In theory the banks would submit the assets with a price, but this approach leads to many more questions.
• Foreign banks can also participate, if they have U.S. operations......ummmmm.
• Increases the debt ceiling to $11.3 trillion dollars since we'll have to issue debt to pay for all of this.
• The infrastructure for this plan has not been outlined.
• No real plan to help main street, just wall street.

It's clear the markets are not happy with this plan and there are worries about the impacts to our financial system. More details will have to surface and hopefully Congress will not approve a hastily conceived plan without thought to the longer term impacts. More to come as details unfold.

Existing home sales and new home sales are due out later this week.