A wave of panic swept over the financial markets causing the Dow Jones industrials to drop over 700 points during trading amidst fears the financial bailout package would be rejected by the House of Representatives. The vote was at 207 for vs. 226 against when the official voting time for the plan expired, but House leadership hasn’t officially closed the vote.

“Republicans supplied less votes than Democrats had expected, convincing Democrats to vote against the bailout bill so as not to put their seats at risk,” Clusterstock’s John Carney reports. “Both parties are now negotiating vote trading, with the Democrats arguing the Republicans should get at least 9 more of their members to vote ‘Yea,’ bringing the Republican favorable votes up to signficiantly. At issue, many on the Hill believe, how many seats each party should put at risk by voting for this deeply unpopular bailout.”

The weight of failed mortgage debt could be felt as the market plunged to levels not seen since the terrorist attacks of 9/11. Brokers and investment bankers were seen hanging their heads in disbelief as the market continued to experience volatility on a level that was a rougher ride than the most terrifying rollercoaster.

“Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that,” said Chris Johnson president of Johnson Research Group. “This isn’t a market for the timid.”

In tech stock news, both Apple Inc. (APPL) and Google (GOOG) plunged to 52 week lows.

Shares of Apple Inc. plunged to a 52-week low Monday after analysts downgraded the stock because they believe slowing consumer spending will hit its computer business. The stock fell $18.16, or 14 percent, to $110.08 in midday trading. Earlier in the day, the shares touched $105.77, the lowest level since early 2007.

Google’s share price slipped deep into the mud in trading Monday falling below their 52-week low of $406.38 and then below $400 to $398.50. That’s a price they’ve not seen since September of 2006 and its furlongs away from their 52-week high of $747.24 back in 2007.

In brighter news, sales of razor blades, rope and handguns were through the roof as CEO’s and other market makers were seen loading up on these supplies in record numbers.

This year, we’ve seen prominent financials companies such as Lehman Brothers, AIG, Fannie Mae and Freddie Mac on the ropes amidst a slumping economy. Although Senator John McCain seems to believe the economy is in good shape, truth is working middle class Americans have felt the pinch first but now it’s the time for the upper middle class, those making $100,000 per year and upwards to start tightening their belts.

While the average middle class American might be fortunate enough to own a home and a car, it’s the upper middle and upper class Americans who live and die by their stock portfolios. Wall Street’s woes are going to have a direct impact on suburban, upper middle class communities around the US and not just because the proposed $700 billion bailout will result in higher taxes for most Americans. The pain will spread beyond the banks themselves to their back office and IT operations, accountants, lawyers, and other professional service employees who depend on work from finance companies.

BusinessWeek compiled a compelling list of Towns That Will Be Hit Hardest by Financial Crisis. The list is based on the amount of a city or town’s population that is employed in or around the finance and real estate industry.

1. Darien, Conn.
Share population in finance and real estate: 27.23%
Nearest large city: New York
Population: 20,666
Median salary: $168,687

2. Bloomington, Ill.
Share population in finance and real estate: 26.31%
Nearest large city: Chicago
Population: 70,395
Median salary: $54,971

3. Hoboken, N.J.
Share population in finance and real estate: 23.33%
Nearest large city: New York
Population: 40,002
Median salary: $81,356

4. West Des Moines, Iowa
Share population in finance and real estate: 22.15%
Nearest large city: Des Moines
Population: 54,627
Median salary: $61,303

5. Garden City, N.Y.
Share population in finance and real estate: 20.22%
Nearest large city: New York
Population: 21,671
Median salary: $121,831

6. Summit, N.J.
Share population in finance and real estate: 19.74%
Nearest large city: New York
Population: 20,618
Median salary: $111,497

7. Westport, Conn.
Share population in finance and real estate: 19.39%
Nearest large city: New York
Population: 26,822
Median salary: $137,133

8. University Park, Tex.
Share population in finance and real estate: 18.83%
Nearest large city: Dallas
Population: 24,582
Median salary: $110,976

9. Wethersfield, Conn.
Share population in finance and real estate: 18.73%
Nearest large city: Hartford
Population: 26,146
Median salary: $63,359

10. Mountain Brook, Ala.
Share population in finance and real estate: 18.66%
Nearest large city: Birmingham
Population: 20,654
Median salary: $115,148

Jeremy Nowak, currently president of The Reinvestment Fund and a board member of the Philadelphia Federal Reserve, said the cities and towns on the list aren’t necessarily in trouble just yet. Much of it depends on the steadfastness of the local employers and a potential resurgence of businesses. Not all banks are doing badly at this juncture, he said. And the insurance industry is, so far, relatively healthy, despite the myriad of troubles besieging industry giant AIG (American Insurance Group).

“These are places to watch,” Nowak said. “This will be the starting point for future investigation, and not the answer.”

Wouldn’t it be nice if the US Government were there to bail out each and every one of us whenever we’ve made poor financial decisions or mismanged our businesses?

While the average American family may be carrying $10K in credit card debt due to staggering interest rates offered by credit card companies, there is no relief in sight for them. There are also uncountable Americans who have carried auto insurance, homeowners insurance and health insurance for their entire adult lives without a single claim ever made. I’m one.

I’ve been paying outrageous auto insurance rates for the last 20 years without a single incedent, a single claim filed, not even a parking ticket, yet my rates continue to rise year to year, partly attributed to other drivers negligence. It’s the same with my homeowners insurance and my health insurance. God forbid I ever need to use either but still, the homeowners insurance on my home in Florida tripled from appx. $2000 per year in 2003 to over $6000 per year in 2008. With those costs on the rise, it’s ludicrous to me that AIG is having difficulties keeping their head above water.

According to an MSNBC article, the US government has agreed to a bail out of insurer AIG in the amount of $80 billion. Yes, that’s billion, not million…

In a bid to save financial markets and economy from further turmoil, the U.S. government agreed Tuesday to provide an $85 billion emergency loan to rescue the huge insurer AIG. The Federal Reserve said in a statement it determined that a disorderly failure of AIG could hurt the already delicate financial markets and the economy. It also could “lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance,” the Fed said. …. The Fed said in return for the loan, the government will receive a 79.9 percent equity stake in AIG.

So what this means is that once again, taxpayers are going to bear the brunt of a loan made to a mis-run corporation. While the business world can be unforgiving to the average business, companies like AIG have a fairy godmother to sprinkle pixie dust on their poor business decisions and make it all go away at the expense of taxpayers.

My question is, “Where were government regulators when AIG was getting this large” and why wasn’t action taken by the National Association of Insurance Commissioners? How does a company such as AIG get so far in debt without notice of AIG’s key executives? While Chairman/CEO, Mr. Robert B. Willumstad has an undisclosed stake in AIG, other key executives account for appx. $20 million in base pay alone before any performance incentives and bonuses. Here’s the to eschelon at AIG and what they are earning while allowing the taxpayer to foot their salaries and incentives:

It just boggles my mind that four men earning over $20 million between them, one at the top with an undisclosed amount, could mismanage a business like AIG and end up crying for a government bailout. Anybody else would be fired, terminated without any severance pay if they fouled up as badly as these “key executives” at AIG did. Granted, the lot of them will probably be on their way out due to the AIG bailout but chances are they will each walk away with millions of dollars in their pockets while the average taxpayer will feel the pinch.

The stock market plummeted today as paniced investors reacted on news of Lehman Brothers Holdings Inc. bankruptcy filing and news of a forced sale of Merrill Lynch to Bank of America for $50 billion in stock. The Dow Jones Industrial Average sank under $11,000 to $10,917, a whalloping 4.42% loss for the major index. Tech stocks on the NASDAQ didn’t fare much better with the index losing 81.36 points or 3.60% of it’s value from the previous trading day. The losses today were the major indexes worst single day point drops since the September 2001 terrorist attacks.

The chilling effect was not felt solely in the US Markets as stocks also posted big losses in markets across much of the world. Investors remain anxious about American International Group Inc. (AIG), which is seeking emergency government funding to bail them out. A potential shutdown of the world’s largest insurance provider would likely have dire implications far beyond the scope of the Lehman Brothers bankruptcy which is the largest US bankruptcy on record.

“I think as we get closer to the close, people continue to get more nervous,” said Ryan Larson, senior equity trader at Voyageur Asset Management, a unit of RBC Dain Rauscher. “People sense that there is still a lot more pain to be felt.”

In other circles, Treasury Secretary Henry Paulson said Monday the American people can remain confident in the “soundness and resilience in the American financial system.”

Despite the bloodletting on Wall Street, Treasury bond prices soared on Monday and Oil prices closed below $100 a barrel, a 7 month low. Crude prices have now essentially given up all of their gains for the year, extending a steep, two-month long slide from record levels above $147 a barrel to today’s current position.

Economists say the Fed is preparing to meet Tuesday to once again cut a key interest rate this week or possibly later this year as a result of the carnage on Wall Street. In an effort to calm investors worries, the hugely unpopular President Bush assured the country his administration is “working to reduce disruptions and minimize the impact of these developments on the broader economy.”

UAL Corporation (NasdaqGS: UAUA), the parent company of United Airlines saw it’s stock plummet to low of $2 per share in trading on Monday, due in part to a mis-dated article concerning UAL’s 2002 filing for bankruptcy which appeared on Google News on Monday. The six year old article was made to appear current to Google News users and the mis-dated story was blamed for a steep drop in UAL’s stock price and lead to the airline releasing a clarification for worried investors that they had not filed for bankruptcy.

Infoweek elaborated on the fiasco :

The problem started when Googlebot, the software program that Google News uses to index news sites, mistook one of the most popular stories on the Web site of The Sun-Sentinel, of Fort Lauderdale, Fla., for breaking news. The story, “United Airlines Files for Bankruptcy,” was then posted on Google News as a new story, even though the original news story was published on Dec. 10, 2002.

The Securities and Exchange Commission will be opening a preliminary probe into the drop in UAL’s stock, The Wall Street Journal reported Thursday afternoon. Although the robe is in the preliminary stages and may not result in a full investigation, the SEC will still be looking at if there was any negligent or improperr behavior behind the release of a six year old story as current news.

The problem began when a single internet visitor in the wee hours of Sunday morning, a period of low traffic to the newspaper’s business section, bumped it into a “Popular Stories” section of the newspaper’s Web site. A subsequent visit to the story resulted in the Googlebot crawling the story again.

“This time, despite the fact that the URL to the old story hadn’t changed, despite the fact that Googlebot had seen this story previously, it was apparently treated as though it was breaking news,” it said.

Tribune (NYSE: TXA), the parent copany of The South Florida Sun-Sentinel, said it asked Google “months ago” to stop using Googlebot to crawl its Web sites after it identified problems with the program. But Google denied such a request was ever made.

“Despite the company’s earlier request and the confusion caused by Googlebot and Google News earlier this week, we believe that Googlebot continues to misclassify stories,” Tribune said.

According to an article in the Wall Street Journal today, the US Justice Department has hired power hitting litigator Sanford Litvack for a possible antitrust case against search marketing giant Google :

The Justice Department has quietly hired one of the nation’s best-known litigators, former Walt Disney Co. vice chairman Sanford Litvack, for a possible antitrust challenge to Google Inc.’s growing power in advertising. Mr. Litvack’s hiring is the strongest signal yet that the U.S. is preparing to take court action against Google and its search-advertising deal with Yahoo Inc. The two companies combined would account for more than 80% of U.S. online-search ads.

While it’s rare that the Justice Department calls on outside litigators in these type of cases, Mr. Litvack is no stranger to antitrust laws as he was the Justice Department antitrust chief under President Jimmy Carter.

Things could be getting sticky for Google. It seems the majority of complaints to the Justice Department regarding the search-advertising deal with Yahoo Inc. were not from competitors but from The Association of National Advertisers, a trade group that represents major companies like Procter & Gamble Co. and General Motors Corp.

Full article here : Top Lawyer Is Selected As U.S. Mulls Google Suit