Technology SPDR – XLK

3%

Technology SPDR – XLK

Percentage is the estimate weight of the index components in the S&P 500 as of 10/3/08. About the Fund
Stocks primarily covering products developed by internet software and service companies, IT consulting services, semiconductor equipment and products, computers and peripherals, diversified telecommunication services and wireless telecommunication services are included in this Index. Components include Microsoft Corp., Intel Corp., International Business Machines Corp.

IB chief’s call may spark political storm

Intelligence Bureau chief E S L Narasimhan on Thursday strongly articulated the need for special laws to deal with the ever growing ter

ror threat.

He also took up another long-held grievance of police personnel — the harassment they have to endure in courts for alleged human rights violations. Tapping into the angst of the intelligence and police community on this score, the IB chief asked for adequate legal protection for cops in counter-terrorism operations.

He lamented the fact that officers responsible for neutralising fidayeen attacks are subjected to legal and extra-legal campaigns by activists.

“We need to find answers to these issues as national counter-terrorism strategy suffers immensely when officers and men who put at stake everything in protecting society, find themselves helpless facing legal and extra-legal campaigns when the threats have receded,” Narasimhan said.

While the points were greatly appreciated by his comrades in uniform, Narasimhan’s unusually candid remarks can set the stage for a political firestorm. Leftists, liberals and human rights activists are sure to frown upon it even as BJP grabs the bites to claim vindication.

So far, two special anti-terror laws have been taken off the statute book after a high-voltage campaign that they were being used to target members of a particular community.

Before POTA, TADA, enacted by Rajiv Gandhi government at the height of Khalistani terror, was allowed to lapse when it came up for renewal because of an effective campaign against its alleged “misuse” against the minority community.

Police personnel, however, have continued to demand for special legal back up to cope with the terror threat. In the absence of POTA, cops probing the Mumbai serial blasts booked the alleged protagonists under MCOCA which, unlike the normal law, admits confessions recorded by senior police officials.

In his address, the Prime Minister stressed that his government was determined to stamp out the terror threat. “Our government is determined to fight and root out terrorism and its ideologies that justify and seek to sustain it.”

IB to go hi-tech, get more manpower to fight terror

Intelligence Bureau — which has come under flak for its failure to keep tabs on tech savvy jihadis — is set for major revamp with the g

overnment recruiting 6,000 more spies to strengthen its existing cadre of nearly 25,000 personnel. The IB will also get modern gadgets to monitor cyber communication.

The idea is to turn the internal spy agency into a potent force to fight terrorists through effective intelligence in the age of modern communication systems. While new-age gadgets will give IB an edge through technology, the increased manpower will widen the scope for human intelligence (humint) — which played an important role in cracking recent terror attack cases.

The home ministry also plans to set up an exclusive “research & technology centre” within IB to keep a complete databank of terrorists and suspicious persons under one umbrella. The job of the new centre will also be to “research and analyse” the technological aspects of threats which have, of late, multiplied due to extensive use of the Internet by the new breed of educated terrorists.

“Widespread use of cyber technology — like Wi-Fi system — in the recent terror attacks, where terrorists of Indian Mujahideen (IM) had not only used it for sending emails but also for networking among their cadres for planning and execution of their operations, has forced us to rethink our strategy,” said a senior home ministry official.

The plan for modernisation and increasing the strength of IB — which has already got Cabinet nod — came up for review recently when home minister Shivraj Patil asked the agency to complete the recruitment process of 6,000 additional spies, including technical and cyber experts, by next year. The emphasis in the meeting — attended by IB chief P C Haldar and home secretary Madhukar Gupta among others — was on impressing upon states to strengthen their special branches (intelligence wing) with the Centre helping them out with funds and expertise.

Referring to how new technologies were increasingly being used by jihadis for assembling bombs (using integrated chips for the first time in Bangalore and Surat operations) and networking among themselves through Internet, the official said, “Since terrorists the world over are using new communication technologies as ‘weapon of mass influence’ for the warfare, we cannot afford to function in the traditional way — even though it has its own importance.”

Though the official did not disclose the kind of methodology being adopted to fight tech savvy jihadis, he mentioned the possibility of bringing certain changes in the Information & Technology Act to widen the scope of cyber intercepts, including snooping on text messages.

Obama: “No Welfare For Wall Street”

Democratic presidential candidate Barack Obama said that the looming credit crisis was an urgent situation for which action needs to be taken, but he wants to ensure that the $700 billion bailout package being crafted by the Bush administration and Congress does not amount to “welfare for Wall Street.”

“My inclination is to support it, because I think Main Street is now at stake,” he told Face The Nation host Bob Schieffer. He added, though, “I’m not happy about it.”

“This [crisis] could affect every sector of the economy. If the credit crisis continues or worsens, then suddenly small business people can’t make their payroll. You have large businesses who can’t sell corporate debt, which could bring the entire economy to a grinding halt.”

Obama was pleased that, at first reports, his basic goals for the package were included: “The issue of making sure that we had strong oversight; the insistence that taxpayers share in the gains (if there are any) when the market recovers; the insistence that homeowners get additional relief so that there’s some reciprocity – if in fact we’re bailing out or helping banks, they in turn have to help rework mortgages for people who are potentially facing foreclosure; and the final thing, the issue of executive compensation, making sure that taxpayer money is not going to pad bonuses or golden parachutes.

“It appears that those principles have all been incorporated into the core agreement. And I’m going to be reviewing the language over the next day to make sure that those provisions actually stick.”

But beyond the bailout (which has reportedly been agreed to by Congressional leaders), Obama focused on how the U.S. economy came to the point of a president sounding the alarm that a catastrophe was in the offing if drastic action wasn’t taken immediately. “We have to remember how we got here, not so much to allocate blame as to understand the choices that are going to face the next president. Unless we update our 20th century regulatory framework for a 21st century global financial system, then we’re going to continue to be vulnerable to this kind of situation, and I think the next president has to come in with a very strong package of reforms.”

Obama said fighting off lobbyists and special interests was key, as is recognizing that the fundamentals of our economy are not strong – which he suggested his opponent, Republican John McCain, has not recognized.

“Some of the root causes of this crisis have to do with the day-to-day struggles that ordinary people are going through,” he said, “with flat wages and incomes but constantly increasing costs.

That puts pressure on them to take out more debt, to use home equity loans, to try to refinance. It created an environment in which this kind of crisis potentially could occur.

“We should have never gotten into this place in the first place. And I think this is a final verdict on eight years of failed economic policy.”

Obama noted that the dire predictions of Treasury Secretary Henry Paulson, Federal Reserve chairman Ben Bernanke and President Bush set the stage for a week of high drama that, he said, shouldn’t have ever happened. “Think about it. I mean, we had the largest bank failure in our history, and it wasn’t even the major news that day!”

“You agree with the president’s assessment that it’s as serious as he said it was?” Schieffer asked.

“I agree that this is probably the most serious financial crisis we’ve faced since the Great Depression,” Obama said. “And what we can’t do is do nothing. What I absolutely insist on, though, is that the same sense of urgency that we have about Wall Street, we have about folks on Main Street who have been struggling for a long time.”

Obama said more serious regulations are required. “We have to set up some rules of the road, some regulations that work to keep the system solvent, and prevent Wall Street from taking enormous risks with other people’s money, figuring that, ‘Tails I win, heads you lose,’ where they don’t have any risk on the downside.

“But the second thing that we have to learn is that, if you think about how this all started, subprime lending, you’ve got homeowners who ultimately could not make payments on their homes, and that’s an indication of the degree to which family budgets have been under huge stress for years now, and we haven’t been paying much attention about it because the theory has been, ‘Well, as long as those at the top are doing well, prosperity somehow is going to trickle down.’”

In response to Thursday’s meeting at the White House, attended by both Obama and McCain, at which the tentative brokered agreement was upset by House Republicans, prompting further tense negotiations, Schieffer asked Obama if McCain should get any credit for helping to get the bailout package settled.

“No,” Obama said. “Look, here are the facts: For two weeks, I was on the phone every day with Secretary Paulson and the congressional leaders, making sure that the principles that have ultimately been adopted were incorporated into the bill. None [of the amendments in the package] were in the president’s provision. They are identical to the things I called for the day that Secretary Paulson released his package. That, I think, is an indication of the degree to which, when it comes to protecting taxpayers, I was pushing very hard and involved in shaping those provisions.

“But understand this: The important thing here is making sure that we don’t have a photo op session, because this is serious. We should not have been here in the first place. And, you know, I think the critical debate that we’re going to have to have between myself and Senator McCain moving forward is, how do we prevent this kind of thing from happening again?”

In addition to the bailout, Obama discussed Friday’s debate, where McCain accused Obama of “not understanding” something.

“The interesting thing is, he kept on asserting I didn’t understand, but beyond saying the line never indicated what exactly I didn’t understand. It’s true I don’t understand Senator McCain’s positions on a whole host of issues, because given how the Bush administration has created an extraordinary crisis in the economy and considering that we remain bogged down in Iraq, al Qaeda is resurgent, Iran is developing nuclear weapons, that our foreign policy is if not in a shambles, then certainly in a place that I think anybody is comfortable with – given those facts, what I don’t understand is that Senator McCain continues to promote them.”

The end of an era on Wall Street?

Just before midnight 10 days ago, as a financial whirlwind tore through Wall Street, someone filched a 75-pound bronze bust of Harry Poulakakos from the vestibule of his landmark saloon on Hanover Square in New York.

Digging into a bowl of beef stroganoff the day after the bust disappeared — it was eventually returned anonymously — Poulakakos recalled some of the customers who had passed through his doors since he opened his bar, Harry’s, 36 years ago.

Ivan Boesky once had a Christmas party there. Michael Milken worked over at 60 Broad. Tom Wolfe immortalized the joint in “The Bonfire of the Vanities.” Poulakakos says he even got to know Henry Paulson Jr., the former Goldman Sachs chief executive and now the Treasury secretary.

Poulakakos, 70, has also seen his share of ups and downs on the Street, including the 1987 stock market crash, when Harry’s filled up at 4 p.m. and stayed open all night. But the upheaval he’s witnessing now — much of Wall Street evaporating in a swift and brutal reordering — is, he said, the worst in decades.

“It’s the beginning of the end of the era of infatuation with the free market,” said Steve Fraser, author of “Wall Street: America’s Dream Palace,” and a historian. “It’s the end of the era where Wall Street carries high degrees of power and prestige. And it’s the end of the era of conspicuous displays of wealth. We are entering a new chapter in our history.”

To be sure, living large and flaunting it are unlikely to exit the American stage, infused as they are in the country’s mojo. But with Congress having approved a $700 billion banking bailout, historians, economists and pundits are also busily debating the ways in which Wall Street’s demise will filter into the popular culture.

It’s an era that traces its roots back more than two decades, when suspendered titans first became fodder for books and movies. It’s an era when eager young traders wearing khakis and toting laptops became dot-com millionaires overnight. And it is an era that roared into hyperdrive during the credit boom of the last decade, when M.B.A.’s and mathematicians raked in millions by trading and betting on ever more exotic securities.

Over all, the past quarter-century has redefined the notion of wealth. In 1982, the first year of the Forbes 400 list, it took about $159 million in today’s dollars to make the list; this year, the minimum price of entry was $1.3 billion.

As finance jockeyed with technology as economic bellwethers, job hunters, fortune seekers and the news media hopped along for the ride. CNBC became must-see TV on trading floors and in hair salons, while people gobbled up stories about private yachts, pricey jets and lavish parties, each one bigger and grander than the last.

Finance made enormous and important strides in these years — new ways to parse risk, more opportunities for businesses and individuals to bankroll dreams — but for the average onlooker the industry seemed to be one endless party.

In 1989, tongues wagged when the 50th birthday celebration for the financier Saul Steinberg featured live models posing as Old Masters paintings. That bash was outdone last year, when Stephen Schwarzman, head of the private equity firm Blackstone, feted guests at a 60th birthday party boasting an estimated price tag of $5 million, video tributes and the singer Rod Stewart.

“The money was big in the ’80s, compared to the ’50s, ’60s and ’70s. Now it’s stunning,” said Oliver Stone, who directed the 1987 film “Wall Street” and is the son of a stockbroker. “I thought the ’80s would have been an end to a cycle. I thought there would be a bust. But that’s not what happened.”

Now, with jobs, fortunes and investment banks lost, a cultural linchpin seems to be slipping away.

“This feels very similar, historically, to 1929 and the emotions that filled the air in the months and years that followed the crash,” Fraser said. “There is a sense of extraordinary shock and astonishment, which is followed by a sense of rage, outrage and anger directed at the centers of finance.”

A WALL STREET hotshot was in a real-estate quandary, and he wanted Barbara Corcoran to help him sort things out.

A Look At Wall Street’s Shadow Market

n Friday Congress finally passed – and President Bush signed into law – a financial rescue package in which the taxpayers will buy up Wall Street’s bad investments.

The numbers are staggering, but they don’t begin to explain the greed and incompetence that created this mess.

It began with a terrible bet that was magnified by reckless borrowing, complex securities, and a vast, unregulated shadow market worth nearly $60 trillion that hid the risks until it was too late to do anything about them.

started out 16 months ago as a mortgage crisis, and then slowly evolved into a credit crisis. Now it’s something entirely different and much more serious.

What kind of crisis it is today?

“This is a full-blown financial storm and one that comes around perhaps once every 50 or 100 years. This is the real thing,” says Jim Grant, the editor of “Grant’s Interest Rate Observer.”

Grant is one of the country’s foremost experts on credit markets. He says it didn’t have to happen, that this disaster was created entirely by Wall Street itself, during a time of relative prosperity. And they did it by placing a trillion dollar bet, with mostly borrowed money, that the riskiest mortgages in the country could be turned into gold-plated investments.

“If you look at how this started with the subprime crisis, it doesn’t seem to be a good bet to put your money behind the idea that people with the lowest income and the poorest credit ratings are gonna be able to pay off their mortgages,” Kroft points out.

“The idea that you could lend money to someone who couldn’t pay it back is not an inherently attractive idea to the layman, right. However, it seemed to fly with people who were making $10 million a year,” Grant says.

With its clients clamoring for safe investments with above average return, the big Wall Street investment houses bought up millions of the least dependable mortgages, chopped them up into tiny bits and pieces, and repackaged them as exotic investment securities that hardly anyone could understand.

60 Minutes looked at one of the selling documents of such a security with Frank Partnoy, a former derivatives broker and corporate securities attorney, who now teaches law at the University of San Diego.

“It’s hundreds and hundreds of pages of very small print, a lot of detail here,” Partnoy explains.

Asked if he thinks anyone ever reads all this fine-print, Partnoy says, “I doubt many people read it.”

These complex financial instruments were actually designed by mathematicians and physicists, who used algorithms and computer models to reconstitute the unreliable loans in a way that was supposed to eliminate most of the risk.

“Obviously they turned out to be wrong,” Partnoy says.

Asked why, he says, “Because you can’t model human behavior with math.”

“How much of this catastrophe had to do with the instruments that Wall Street created and chose to buy…and sell?” Kroft asks Jim Grant.

“The instruments themselves are at the heart of this mess,” Grant says. “They are complex, in effect, mortgage science projects devised by these Nobel-tracked physicists who came to work on Wall Street for the very purpose of creating complex instruments with all manner of detailed protocols, and who gets paid when and how much. And the complexity of the structures is at the very center of the crisis of credit today.”

“People don’t know what they’re made up of, how they’re gonna behave,” Kroft remarks.

“Right,” Grant replies.

But it didn’t stop ratings agencies, like Standard & Poor’s and Moody’s, from certifying the dodgy securities investment grade, and it didn’t stop Wall Street from making billions of dollars selling them to banks, pension funds, and other institutional investors all over the world. But that was just the beginning of the crisis.

What most people outside of Wall Street and Washington don’t know is that a lot of people who bought these risky mortgage securities also went out and bought even more arcane investments that Wall Street was peddling called “credit default swaps.” And they have turned out to be a much bigger problem.

Wall Street waves unsettle Connecticut

Despite appearances, the worries of Main Street are being felt even here, in Wall Street’s well-manicured backyard.

“I’m old and coming up to retirement,” says Jeff Ramer, 64, an attorney who has lived more than half his life in this affluent community. “I’m concerned that the money we put aside for retirement has taken a great hit.”

Through the years he has voted for more Republicans than Democrats, he says. But the financial crisis roiling Wall Street has solidified his desire for political change — and his support for Democratic presidential nominee Barack Obama. “It has a bearing for me,” Ramer says of the economy.

The meltdown that has caused investment firms to fall, stocks to plunge and the credit markets to slow to a virtual standstill has made the economy the primary concern for many Americans as they prepare to select a new president in barely four weeks.

The tremors on Wall Street and fallout from the $700 billion rescue plan President Bush signed into law last week are felt acutely in this state. It is home to numerous hedge funds, Fortune 500 companies and residents who work in finance and related industries on Wall Street and elsewhere.

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Connecticut draws 45% of its income tax revenue from Fairfield County, a finance center next door to New York. Greenwich alone, tucked in the county’s southern end, paid more than $598 million in state income taxes in 2006, 12.7% of the statewide total, according to the governor’s office.

Though the state has more unaffiliated voters than those who declare themselves Republican or Democrat, polls show Connecticut solidly in Obama’s column. In a SurveyUSA poll taken Sept. 24-25 for New York’s WABC-TV, 54% of those questioned support Obama, and 38% prefer Republican John McCain.

“The impact of the financial situation here is probably similar to that around the nation,” says Ken Dautrich, public policy professor at the University of Connecticut. “(Voters) want change, which of course benefits Obama more than it does McCain.”

Connecticut Sen. Joe Lieberman, an independent who was the Democratic vice presidential nominee in 2000, supports McCain. That endorsement has done little to help McCain, Dautrich says.

“I think the feeling is that Lieberman has crossed the line,” he says. “He’s not looking very independent, so we’ve seen his popularity drop through the floor as a result of his outright endorsement and speech at the Republican Convention.”

The head of Connecticut’s Republican Party says the financial crisis may help McCain here by contrasting his economic philosophy with Obama’s.

“McCain understands the free market,” says Chris Healy, the state party’s chairman. “He understands the role government plays in it. He understands the punishing role taxes play in it in tough times. … Is there enough time to make that case? Yes. I think McCain will make it.”

Along Greenwich Avenue, known to Greenwich residents simply as “The Avenue,” a glistening array of Jaguars and Mercedes Benzes is parked a diamond’s toss from the Bentley dealership and other high-end retailers downtown.

Some who work in local shops say business has slowed. Jose Candray, manager of Village Bagels, says tips are smaller and customers are buying their own cream cheese rather than paying a little more to have deli employees layer it on.

Several Greenwich residents say they’re not impressed by how either political party handled the partisan tussling over the economic recovery package.

“Both lousy,” says Tom Mahr, 50, an investment banker who lives and works in Greenwich.

It didn’t make him change his mind about probably voting for McCain in November.

“I’m a believer that less taxes for everybody is good as opposed to less taxes for some,” says Mahr, explaining why he prefers McCain. “We run a small company with 40 people worldwide. If taxes go up, it’s hard for us.”

Ramer says he believes in the free market system, but “I favor the idea of using public money” to promote stability.

Others say the economy is only one issue guiding their decision.

“In the beginning, I thought McCain was a decent sort of candidate in that it wouldn’t matter enormously if he won,” says Jane Pattison, 71, whose support of Obama has become even more solid in the wake of the turmoil on Wall Street. “I thought they were both good men.

“But lately I’ve seen great flaws in (McCain): instability, an erratic nature and, of course, the most important thing was his selection of a vice presidential candidate,” Alaska Gov. Sarah Palin.

Bob Jermain, an investment banker, also remains an Obama supporter. His lifestyle has changed because of the country’s fiscal troubles. “My kids don’t need 20 sweaters,” says Jermain, 49. “We all bought way more than we needed because we could. Capitalism gone wild.”

Americans eye bailout, and continue cutting back

Relief on Wall Street over the hard-won passage of a $700 billion bailout package for the financial system apparently hasn’t yet trickled down to the pubs, storefronts, car lots and malls of Main Street.

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Many Americans spent an uneasy weekend wondering whether the rescue would help in time — or at all — and trying to figure out where next to cut back as the economic screws tighten.

Would financing come through for the new washing machine? Could the old car hold out another year? Would a nice dinner out bust the budget?

“People are afraid,” said Linda Morrow, who owns a shoe and handbag store in a Dallas mall. “People basically don’t know what the future will bring. They’re afraid to spend. They want to see what the bailout will do. They’re waiting till after the election.”

In more than two dozen interviews with The Associated Press across the country over the weekend, Americans described those concerns, from tighter personal credit to worries about small businesses to doubts about simply making ends meet.

Matt Watson, a 41-year-old sales manager at a showroom of motorcycles and all-terrain vehicles in Morgantown, W.Va., said his family has cut back on dinners out and is buying more generic products.

The other day, he grabbed a $5 bill off his dresser and headed to a Walgreen’s drugstore for milk and bread.

“I could not buy milk and bread for $5,” Watson said, shaking his head in disbelief.

Aimee Robinson needs a $200,000 loan soon for her business, which sells eco-friendly furniture in Seattle, and wonders whether the bailout might ease the way. The interest rate on her store’s credit card just jumped to 17 percent from 8 percent.

“Everything came to a standstill” this summer, she said. “It hit me really, really bad.”

The bailout plan, quickly signed into law by President Bush after it passed the House by a comfortable margin Friday, will buy bad mortgage debt off the books of staggering banks in hopes of shoring up the American financial system.

It was put together during a harrowing three weeks for the U.S. economy that began with the bankruptcy of investment house Lehman Brothers and a government bailout of insurer American International Group.

The damage has seeped into far-flung corners of the economy. At a company called Tortilla Lady in Flagstaff, Ariz., five women make 1,500 to 1,800 dozen tortillas in an average week, some sold in the shop and others to stores.

For the week of Sept. 15, the week Lehman Brothers collapsed and the crisis took hold, production was only about 1,000 dozen.

“Once this really got into the news and people started understanding what Wall Street meant to them, they’ve become more conscious of their own budget and the limitation of their budget,” said Phebe Faus, an owner of Tortilla Lady.

An AP-GfK poll released last week before the House passed the revised bill found Americans divided on whether they supported the bailout. But a solid majority, eight in 10, said they feared the financial crisis would hit them directly. Many said they were conflicted, lamenting that taxpayers had to step in but believing something had to be done to prop up the economy.

Among that type of adherent is Morgan Cavanaugh, owner of a 75-year-old Irish pub that sits a few blocks from Lake Erie in downtown Cleveland. Standing behind the weathered mahogany bar, he said the bailout stinks.

“I don’t believe we should let them off the hook,” he said. “Either we pay now or we pay later. To me, it’s extortion.”

To him it’s also necessary: The same day, he was talking on his cell phone to a man who has been trying to buy a suburban bar from Cavanaugh but has not been able to secure a loan.

“It passed,” Cavanaugh told the man just after the House vote Friday. “Let’s work something out.” He said the man planned to try for the loan again and said the prospects were “looking up.”

As for business at the bar: Cavanaugh has lowered his drink prices for his customers, a crowd heavy with bankers and brokers. He calls the special the Bankers’ Booze Bailout Fund.

Tight credit remains at the heart of the crisis. In a financial climate of fear and mistrust, banks are charging one another much higher rates to borrow money, and they are snapping their wallets shut to Americans.

The bailout package may get the gears of lending moving again, but it hasn’t happened yet.

Last year, Pennsylvania auto dealer Bill Rosado’s customers had no trouble arranging financing for the cars and trucks they bought. Banks were lined up to provide cash even for people with a risky credit history.

Those days are gone. A customer with decent credit who might have been approved for 100 percent financing not long ago is lucky to get a loan at all today, and even then the interest rate is almost guaranteed to be higher.

“The people with horrible credit, I can justify saying, ‘No more,” Rosado said. “But this is affecting people whose credit isn’t that bad. People with 650 credit scores are being turned down.”

The rescue was aimed in part at restoring confidence in the financial markets. As the crisis worsened, stocks took a huge hit, and Americans seeing their stock funds and retirement savings sapped are more reluctant to spend money.

“A lot of people who come here are wealthy people, and they’ve lost a lot of money in stocks,” said Jaime Galvan, who manages a car wash in Long Beach, Calif. “Most of the people, they’re concerned. They don’t want to spend.”

And a turnaround is no guarantee. President Bush has warned it will take “some time” for the full effects of the bailout bill to take hold in an economy that had a world of trouble even before the banking crisis.

In the meantime, Americans are left find ways to cut back even further.

In Dallas, sales assistant Yvonna Vaughan downgraded from Newport cigarettes to less expensive Kools and wonders whether she’ll be smoking generics before long.

In Denver, secretary Bernice Adolf pays close attention to the sales at her grocery store and makes spaghetti at home with her husband on Friday night instead of their usual dinners out.

“We’re trying to save wherever we can,” she said. “I don’t think the bailout is going to last too long.”

At Zeitoun, a Mediterranean restaurant not far from the Miami airport, owner Samira Marino has noticed everyone is ordering water and more people are sharing meals.

Mike Belo of Columbia, S.C., hasn’t put off any major purchases — yet. But he’s keeping an eye on his business as a property insurance agent, which has dipped as new home sales have slowed.

“It’s hard to get a handle on it,” he said of the bailout. “I’m not in favor of bailing out a bank, but I guess if it’s the No. 1 bank that offers the money … we’re in a no-win situation, really.”

“If I go under,” he said, “no one’s going to bail me out.”

Investors expect volatility as credit woes persist

- The world’s financial markets face an uncertain and possibly volatile week as investors await details about how the Treasury will implement the government’s financial rescue package — and watch for any further fall

The markets have switched their focus to the world economy now that the $700 billion bailout plan has become law. And there’s reason for their concerns — governments across Europe are rushing to prop up failing banks. On Sunday, Germany said it would follow suit with Ireland and Greece in guaranteeing all private bank accounts.

Those steps are the latest sign that the troubles of U.S. banks, which have all but paralyzed credit markets, are affecting the financial systems of other countries. Banks’ hesitation to lend to one another and to many businesses and individuals is the consequence of the bad mortgage debt that the financial rescue is supposed to sweep up. But it’s still unclear how quickly financial institutions will be able to hand that debt to the U.S. government and convince the markets they are healthy again.

Wall Street looked to continue the volatility of last week when trading resumed Monday. Stock index futures declined by more than 1 percent late Sunday, pointing to a lower open. Dow Jones industrial average futures fell 176, or 1.70 percent, to 10,188. Standard & Poor’s 500 index fell 19.3, or 1.74 percent, to 1,089.00, while Nasdaq 100 futures fell 20.25, or 1.37 percent, to 1,457.25.

Doug Roberts, chief investment strategist at ChannelCapitalResearch.com, said the steps taken by governments abroad are welcome because a broad response, not simply the U.S. bailout, is needed to help steady the world’s financial system.

“A lot of the actions that are occurring overseas are good,” he said. “What you really need now is stabilization and that really comes from the government.”

Roberts said the Federal Reserve and other central banks likely will continue to move in as needed to help shore up the markets. But he thinks bringing lasting calm to credit markets and financial institutions will take longer to work out than many observers predict.

“This is much more expansive than anybody is assuming,” said Roberts. “I think that this whole bailout bill is the first step in a series of steps.”

Still, he said policymakers likely will try to hold off on moves like rate cuts until they determine they have little choice. The fear, he said, is that the market could be unimpressed and policymakers would have few tools left to restore investors’ confidence.

“If one doesn’t work what are you going to do for an encore?”

Roberts and other market watchers say it’s possible that the Fed, and perhaps other central banks, could cut interest rates this week — ahead of the central bank’s scheduled meeting at month’s end — if the credit markets don’t show signs of life. With oil prices well off their midsummer highs and indicators pointing to a slower economy, the Fed’s worries about inflation are less than they had been, making it easier to justify a rate cut.

With so many unknowns, it’s likely to be a choppy ride on Wall Street for some time as the Treasury Department starts flexing the new powers granted by the financial rescue, which President Bush signed into law Friday shortly after the House passed a sweetened bill on the second try.

“You’re going to have a lot of volatility and we’re going to get a whole lot of nowhere in the next few weeks,” said Frank Ingarra, co-portfolio manager at Hennessy Funds.

Investors will be straining to see how the Treasury goes about purchasing banks’ debt and what prices the unwanted assets might fetch. If the government pays too little it risks sending more banks into failure by depleting their asset bases. But paying too much could artificially strengthen banks that made bad decisions in lending and hurt taxpayers.

“I think it’s a little bit more ‘show me’ than ‘tell me’ here,” Ingarra said, referring to investors’ desire to see proof that the debt causing the lockup in the credit markets is being absorbed.

Still, he contends the U.S. government rescue ultimately will help unclog the credit markets.

“I think the bailout is huge. It will help us and help to mitigate the recession that we’re in or going to be in,”

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