– The White House and Congress have agreed on Hank Paulson’s $700 billion bank rescue bill. The bill means the US government could be about to become the biggest slum landlord in history as it buys up junk mortgage and securities at above-market prices.

– Dems have included in the bill a clause that will limit executive pay within companies that sell assets to Treasury through an auction process. The bill will prohibit a company that sells more than $300 million of assets to Treasury to make “golden parachute” payments to executives.

No, you didn’t read that headline wrong. According to Forbes.com, the $700 billion price tag on Hank Paulson’s bailout plan for the US financial markets wasn’t based on “any specific data point.” It just seemed like a nice big number. This from Forbes, Tuesday:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”

– There really must be a financial crisis. John “the fundamentals of our economy are strong” McCain has suspended his presidential campaign to to return to Washington to work on the proposed $700 billion bailout bill of financial institutions before Congress.

– Meanwhile, McCain’s fellow Republican George W. Bush made a televised appeal for the swift passage the plan. He said the “entire economy is in danger” and warned of a “financial panic” and “a long and painful recession” if Congress didn’t pass the bill soon.

Barack Obama and John McCain are scrambling to respond to the financial crisis on Wall Street. Both are calling for greater oversight and regulation of the banking sector. But neither is inspiring confidence in his ability to deal with the crisis. Few will admit it – and fewer still in Washington – but the answer to the current crisis does not lie in greater regulation. In fact, as Frank Holmes argues in The Daily Reckoning, legislation such as Sarbenes-Oxley is making matters worse…

Last week was a rollercoaster for US stocks. The Dow whipsawed wildly by almost 2,000 points overall.

On Thursday morning, Rick Pendergraft at Investor’s Daily Edge was predicting a bounce over the next few months based  on the chart of the Dow, record-breaking volume on the major ETFs, and the VIX breaking above the 37.50 level.

Then came the rumors of a massive government bailout along the lines of the Resolution Trust Corp that would hoover up the bad debt of banks that sent stocks rallying and skewed the markets.

Yesterday, central banks launched a coordinated effort to flood global money markets with U.S. dollars in hopes of easing strained financial systems in danger of freezing up entirely. However, many analysts see this as only a short-term solution that will lower overnight lending rates but fail to assist financial institutions with longer-term cash needs, says Jason Simpkins  in Money Morning.

Gold prices soared yesterday. Traders gave the metal its biggest one-day gain in nine years – a 9% rise. This pushed prices up by $70.

So far today, gold is up more than 2% after hitting day high of $868.65 an ounce.

“From the time of Pompeii, gold has been the refuge of choice for investors everywhere,” says Bill Bonner. “It still is. And, looking at the market, gold is going to become the obvious choice for more and more investors.” But what exactly is blowing up?

Anyone following US stocks is likely to have severe whiplash by now. This week has seen some of the most dramatic swings in history.

Eric Roseman says we are approaching the low point in the crisis, although there will likely be more selling ahead.

The most important thing right now is that investors take action to protect their portfolios. Eric recommends a reverse-index ETF to reduce downside risk on equities.