U.S. stocks yesterday (Monday) staged their biggest rally since the Great Depression – with the Dow Jones Industrial Average soaring an all-time record 936 points – on a Federal Reserve-led push to flood the ailing global financial system with dollars and on a U.S. government plan to buy stakes in banks.

The Treasury and Federal Reserve are throwing everything but the kitchen sink to get Wall Street back on track.

But measures so far may pale in comparison to what’s to come.

Mark Nestmann says President Bush just has to declare a “state of national economic emergency” to open up a whole new range of drastic measures.

Past presidents have shut down stock markets, frozen bank accounts, taxed foreign investments and even confiscated gold.

When US stocks dived following the passing of the bailout bill, President Bush sought to calm investors. He said it would “take a while” for the bill to take effect. Problem is George W doesn’t have much of time.

In less than one month, Americans will vote into office either Barack Obama or John McCain. Each has very different ideas about how to tackle the financial crisis.

Martin Hutchinson says Obama is most likely to win on a populist anti-Wall Street platform. But if he follows up this rhetoric with more regulation and protectionism, this could hurt US investors even more in the long run.

Any celebrations over this government bailout (if it gets passed) will be short lived, says Russell McDougal at Investor’s Daily Edge. The $700 billion plan will merely reinforce the fraudulent status quo in US money markets. And that means it will merely postpone the inevitable day of reckoning. Russell says this is a “disastrous long-term strategy” that will eventually wipe out the US dollar and Treasury bonds.

The Bush administration’s failed $700 billion bailout of the financial markets “constitutes the single greatest case of ignoring the free market in modern history,” according to Chuck Butler. Here’s what Chuck says should be happening in a free market. It starts with “an effective cleansing period” and is followed by “a healthy recovery period.”

– “The US may face its longest recession in a quarter century no matter what action Congress takes on Treasury Secretary Henry Paulson’s $700 billion plan to rescue the battered banking industry,” says Bloomberg. The US economy shrank in the third quarter, and “a further contraction is likely in the next two quarters … which would make the recession the longest since 1981-82.”

– After the biggest one-day point drop in history for the Dow US stock futures are pointing to a recovery today. “S&P 500 futures rose 25 points to 1,143.80 and Nasdaq 100 futures added 13.5 points to 1,525.50. Dow industrial futures rose 136 points,” reports MarketWatch.

An insurrection among Republicans in the House of Representatives Friday torpedoed any chance that the Bush administration’s planned $700 billion plan would pass expeditiously, as members of the House refused to back U.S. Treasury Secretary Paulson’s measures and offered up their own plan to solve the credit crisis – a plan they say does not cost the American taxpayer.

Congressional negotiators late yesterday reached a tentative agreement on a credit-crisis compromise. It gives the Bush administration about a third of the $700 billion it has requested up front but made sure half that outlay was subject to a congressional veto, reports William Patalon III.

U.S. stocks dropped for the third straight day yesterday (Wednesday) on worries that increasingly rancorous debates will squelch a proposed $700 billion bailout of the U.S. financial system even as Federal Reserve Chairman Ben S. Bernanke warned Congressional leaders that the credit crisis was already damaging the American economy.

In the currency market, the dollar edged higher against the euro. Late Wednesday, the euro was trading at $1.4619 vs. $1.4645 on Tuesday. Traders were on pins and needles during the second day of Big Ben and Hammerin’ Hank’s hard sell to Congress about their proposed bailout plan.