$700bn won't save America from a slump

There is a simple reason why US Treasury Secretary Henry Paulson's $700bn bail-out package has been so hard to sell to politicians and the American people: it won't really work. Despite the historically massive expenditure and all the little clauses to make sure Wall Street fat cats get their comeuppance, the plan is unlikely to do anything to save the world's biggest economy from a long and crippling downturn.

US Financial Meltdown - The Party’s Over

For years, we Americans have spent more than we earned. We save nothing. Credit card debt, consumer debt, auto debt, mortgage debt, corporate debt — all are at record levels. And with pensions and savings being wiped out, much of that debt will never be repaid. Our standard of living is inevitably going to fall. For foreigners will not forever buy our bonds or lend us more money if they rightly fear that they will be paid back, if at all, in cheaper dollars.

Washington Mutual - U.S. largest bank fails

A man leaves a branch of Washington Mutual in the financial district of New York September 19, 2008. (Lucas Jackson/Reuters)

Thursday's seizure and sale is the latest historic step in U.S. government attempts to clean up a banking industry littered with toxic mortgage debt. Negotiations over a $700 billion bailout of the entire financial system stalled in Washington on Thursday.