8 tril US bailout can not get stocks running

The bailout package is at 8 tril - that is 66% of the US debt accumulated in a century comited in 6 months. The scary part is the market reacts still poorly with record low interest rates. The story we know Japan was the same story only that the guys act a bit quicker now. Goldman lowered their estimates again now they see a 33% drop in earnings down tp 55$ that means with a 8 times PE a regular thing in a deep crisis the SPX should trade at 440 and we will see that level leter in 2009.

Excerpts from Bloomberg
Citigroup's $306 Billion Rescue Fueled by Pizza From Domino's

By Ian Katz, Scott Lanman and Alison Fitzgerald

Nov. 25 (Bloomberg) -- The deal to rescue the world's best- known bank was pieced together by regulators over Domino's pizza in near-empty offices one block from the White House.

Citigroup Inc., whose operations in more than 100 countries range from mortgages to microfinance, received a government rescue package to protect the bank from losses on $306 billion of toxic assets. The agreement, meant to stabilize the company after the value of its stock plunged 60 percent last week, boosted the shares 58 percent in New York Stock Exchange composite trading yesterday.

The effort to prop up the bank included an all-night stay Saturday at its Park Avenue headquarters in New York by about a half-dozen examiners from the U.S. Office of the Comptroller of the Currency, according to a person familiar with the matter. The attempt showed how quickly regulators are forced to move when investors dump the shares of large, interconnected financial institutions. Like Bear Stearns Cos. in March and Lehman Brothers Holdings Inc. in September, Citigroup lost investors' confidence.

Fed Commits $800 Billion More to Unfreeze Lending (Update3)

By Scott Lanman and Dawn Kopecki

Nov. 25 (Bloomberg) -- The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion.

The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a program of $200 billion to support consumer and small-business loans, the Fed said in statements today in Washington.

With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers are aiming to prevent a financial collapse and stamp out the threat of deflation.

“They’re trying to put funds into the system, trying to unfreeze these markets,” said William Poole, the former St. Louis Fed president, in an interview with Bloomberg Television. “Clearly, the Fed and the Treasury are beginning to take a large amount of credit risk.”