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Much of the focus in tonight's vice presidential debate will be on whether Democrat Joe Biden or Republican Sarah Palin says anything stupid. Odds are fairly good that one or both of them will stick their foot in their mouths in front of millions of TV viewers.

Though I am a political junkie, I am hoping that tonight's festivities are gaffe-free. The economy is in such a horrible state that Democrats and Republicans have to raise above partisan politics. In particular, they need to do something to address the heart of the problem -- the millions of people facing foreclosure. Many of them are there because they purchased homes they could not afford. I have heard all of the talk of letting the market correct itself and of moral hazard. That's simply not good enough.

I find it difficult to believe that the U.S. government lacks the resources or the know-how to figure out which homeowners should be helped and which should be left on their own. Why is it so impossible for the U.S. Congress to include some relief in the $700 billion bailout to Wall Street for homeowners? Housing advocates and some bankruptcy judges are arguing that judges should have the power to change the terms of mortgage contracts for people who have sought protection from their creditors. That seems like a sensible idea to me.

Unfortunately, I am not expecting much substantive talk about the economy tonight. Palin, the governor of Alaska, is being kept away from the press after making a fool of herself in some recent interviews. The Tina Fey caricature of her as a loudmouth hick appears to be taking hold. Polls indicate that most Americans believe she is not qualified to be president. John McCain is the only one who seems to think otherwise.

Everywhere I go in the suburban wonderland where I live there seems to be a new housing development. When I visited my brother- and sister-in-law in a neighboring town, I must have passed seven of them. Apparently, word of the housing slowdown has not reached Burlington County, New Jersey.

This seems like madness. After all, the housing market is in the tank. Applications for mortgages fell 23% on a seasonally adjusted basis for the week ended September 26, according to data from the Mortgage Bankers Association cited by Reuters. U.S. single-family home prices fell a record 16.3 percent in July from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indexes.

Consumer confidence is shaky -- heck, I am not feeling so confident even though I bought a car. Foreclosures are at record levels -- still. Banks are tightening their credit standards, making it difficult for borrowers without sterling credit to get loans or refinance their existing ones. That's what makes the rise in the home builder stocks even more baffling.

Shares of Hovnanian Enterprises Inc. (NYSE: HOV), Toll Brothers Inc. (NYSE: TOL) and Lennar Corp. (NYSE:LEN) all gained double-digit percentages in the third quarter. The reason? Investors are chomping at the bit to call a bottom in the housing market. But I sat that's premature. S&P points out that many metropolitan areas are showing double-digit declines in home values. "There are signs of a slowdown in the rate of decline across the metro areas but no evidence of a bottom," David Blitzer, chairman of S&P's index committee, said in a statement.

On the day the stock market was headed into the abyss, my wife and I were busy shopping for cars. I felt like Nero fiddling as Rome burned.

This was not a frivolous purchase. My wife, who like her father is nuts about cars, researched every make and model in our price range for a year. No, make that two. Impulsive, she is not. While we were waiting in our local Ford (NYSE: F) dealership, I checked the stock market on my iPhone (another recent purchase) and was stunned by the dramatic decline in the Dow Jones Industrial Average. My wife gasped when I told her about the Dow's record decline. We briefly wondered whether now was the right time to get a car. Ultimately, we decided to buy the Ford Edge thanks to the zero-percent financing available.

My wife and I are fortunate that we both work and have good credit scores. We live in a modest suburban house and pay off our bills regularly. My wife is a CPA and is fanatical about keeping our debt to a minimum. Until recently, we received at least a dozen offers a week for credit cards and home equity loans. I am glad that my wife insisted we toss them all in the trash. Otherwise, we would have held onto our old car for a while longer since the Big Three are tightening their credit standards.

In perhaps the shortest press conference on record, President George W. Bush confidently predicted that the government's $700 billion rescue of Wall Street will pass. I am not holding my breath.

Bush remarked that the legislative process sometimes is not "pretty." Talk about an understatement. Rhetoric on both sides of the aisle has been boiling over all week. People are angry, and who can blame them? It's a tough sell to taxpayers that there is a huge sense of urgency to rescue financial services companies that overextended themselves by lending money to people who could not afford to pay them back. The whole thing strikes many Americans, particularly those living paycheck to paycheck, as unfair.

Polls have overwhelmingly shown that most people are against the bailout. Most members of Congress have very little to gain right now by sticking out their necks for the Bush plan. If it passes, they have to explain to their constituents why they are helping out Wall Street fat cats. Voters will be angry and will demand explanations about why the value of their 401 (k) has plunged.

Pundits continue to plead on CNBC that the credit market is frozen, making it more difficult for people and businesses to get loans. They have warned of a financial apocalypse worse than the Great Depression. Maybe they are making valid economic arguments, but their message is not resonating with the public.

Members of Congress can ill-afford to alienate voters, many of whom are struggling to make ends meet. A bailout bill may pass but odds are that the process will be ugly and the end result may not be to Wall Street's liking.

JPMorgan Chase & Co. (NYSE: JPM) Chief Executive Jamie Dimon is the new king of Wall Street whose power rivals his company's namesake John Pierpont Morgan.

Over the past year, Dimon managed to steer JPMorgan away from the subprime credit crisis while managing to keep his company's stock from cratering like his competitors'. First, he absorbed Bear Stearns after it went out of business. Now, Dimon has managed to pick up Washington Mutual Inc. (NYSE: WM) -- the good parts of it anyway -- for $1.9 billion. The deal is accretive in 2009.

Dimon is proving to be Wall Street's shrewdest manager. He did not get to be so successful by being a teddy bear. Indeed, reports abound about his abrasive personality. But unlike other Wall Street CEOs, Dimon knows his job is to work for the shareholders. Dimon's zeal for cost-cutting knows no bounds. He got rid of expensive technology outsourcing contracts, figuring the company could do the work cheaper itself.

Let me get this straight: the Democrats are backing George Bush's $700 billion rescue plan that Republicans oppose. These are strange times.

House Republicans have many gripes with the plan. They are pushing to fund the recovery of financial services companies with private capital. Others are raising worries about the cost and the timing of the rescue. These are all valid questions.

Then there's the presidential campaign to consider. John McCain is threatening to skip tomorrow's presidential debates unless a deal on the bailout is reached. Maybe Republicans are throwing up roadblocks so McCain can swoop in and solve the impasse, looking presidential in the process. Barack Obama is also using this bailout for his political gain.

Meanwhile, Democrats are pushing for relief for cash-strapped homeowners. So far, they are not getting much sympathy from the Bush administration.

Treasury Secretary Henry Paulson recently said "the vast majority of foreclosures in this country ... are coming from people who either don't want to stay in their home, took out loans they couldn't afford as the result of irresponsible lending practices."

That's bologna, according to the Center for Responsible Lending, which says that the vast majority of people want to stay in their homes and could afford to if the courts were allowed to modify mortgages. Consumer advocates back the idea as do most Democrats. Bankruptcy judges think it's a good idea as well. The mortgage industry and some fiscal conservatives oppose this provision, arguing that it rewards people for making bad investment decisions.

At perhaps the most critical moment in his presidency, George W. Bush looked into the teleprompter tonight and warned the American people that very bad things would happen to the economy unless Congress passed the $700 billion bailout for Wall Street.

Kudos to Bush's speech writers. He explained the credit crisis fairly succinctly. Of course, he neglected to mention that his administration's opposition to sensible regulation laid the groundwork for the financial maelstrom. That's an issue, though, which will be debated by historians for decades to come.

Details of the bill are still being hammered out. The administration has agreed to caps on executive pay on firms who seek assistance. Some sort of plan to give taxpayers an equity stake in firms that the government helps also seems likely, according to a The New York Times.

The president had little choice but to reach across party lines because members of Congress were not buying the bill of goods being sold by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. Paulson, in particular, showed remarkably poor political instincts by insisting that the bailout be approved as written. Whoever told him that Congress would give him a $700 billion blank check was crazy.

Meanwhile, the crisis is becoming the top issue of the presidential campaign. Republican John McCain today suspended his presidential campaign and called for Friday's presidential debate to be postponed. This is a stunt. McCain and Barack Obama do not sit on the relevant committees dealing with the crisis. Their presence in Washington will have little impact on the development of a deal.

Postponing the debates is an especially bad idea. The American people need to hear the plans McCain and Obama have for the economy. My colleague Peter Cohan points out that McCain has said many things about the economy such as "the fundamentals of the economy are strong" which he probably now regrets.

It's official: Main Street does not believe that Wall Street deserves a $700 billion rescue from Congress.

By a margin of 55% to 31% in a Bloomberg/Los Angeles Times poll, American said that they don't believe the government should "bail out private companies with taxpayer dollars, even if their collapse could damage the economy," according to Bloomberg News. That's a stunning rebuke to the Bush administration.

Though Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke are thumping their chests demanding that Congress act immediately to head off the worst financial crisis since the Great Depression, members of Congress are not so sure. Senate Banking Committee Chairman Chris Dodd (D-CT) indicated to reporters yesterday that passage of the bill this year was not a sure thing. Maybe that's political posturing, but it should scare investors nonetheless.

Democrats and Republicans are getting hammered by outraged constituents questioning why the government should bail out sleazy Wall Street bankers and not lift a finger to help homeowners hurt by the credit crunch. The American people have nothing against people getting rich. They do resent those, however, those who they believe cut corners, which is exactly how Wall Street got into this mess. Anti-bailout sentiment is so thick you can cut it with a knife.

One of the many lingering questions about the government's $700 billion buyout of the financial services industry is what to do about Washington Mutual Inc. (NYSE: WM).

The Seattle-based bank, which under former Chief Executive Kerry Killinger racked up billions of dollars in losses following a disastrous acquisition and lending strategy, is reportedly trying to sell itself. Officials with the Office of Thrift Supervision are eager for a "speedy" sale, according to the Financial Times. JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC), Citigroup Inc. (NYSE: C), HSBC and Banco Santander all have expressed an interest in WaMu, the paper said.

More speficially, they are probably most interested in Washington Mutual's network of more than 2,300 "consumer and small business banking stores" throughout the country. And what about the company's radioactive loan portfolio? That, fellow taxpayers, is all yours.

How much subprime sludge is on WaMu's books is not clear. As of June 30, it had assets of more than $309.7 billion. WaMu is expecting $19 billion $4.5 in loan losses during the quarter. The losses may lost as much as $19 billion over the next two-and-a-half years though analysts are expecting the red ink to be more like $28 billion, according to BusinessWeek. To make matters worse, WaMu does about half of its lending in California, one of the states hit hardest by the subprime crisis.

Remember that old joke that a conservative is a liberal who got mugged? Well, maybe we can now say that a socialist is a free marketer who just got a $700 billion government bailout.

Lost among all of the talk about whether Hank Paulson and Ben Bernanke have become the new overlords of the American economy, is discussion about helping save homeowners from the Bush administration. All that was said is that homeowners want the U.S. Congress to pass the rescue bill quickly.

Democrats in Congress have other ideas. Sen. Chuck Schumer (D-NY) told Fox News Sunday that " we have to do something about the mortgage crisis, not just foreclosures but the price of housing."

Schumer makes a good point, but figuring out what to do is tricky. More must be done. The consequences of massive foreclosures are too big to ignore.

I have heard the arguments before that we should not reward speculators and people who bought homes that they could not afford. That sounds great if we lived in a free market utopia. But as the last few days have illustrated, the free market ain't what it used to be.

Financial stocks, which have been bloodied over the past few weeks, rallied today on the plan announced by Treasury Secretary Henry Paulson for the government to acquire troubled bank assets. The recently announced ban on short-selling helped the shares as well.

Goldman Sachs Group Inc. (NYSE: GS), down 40 percent for the year, rose $20 to $128 in mid-morning trading. That's about an 18 percent rise and comes a day after the stock hit a 52-week low. Remember, Goldman recently reported a 70 percent decline in third quarter profits which given the billions of write-offs taken by its competitors is almost miraculous. Maybe Paulson decided the government needed to suck away the bad investments from their balance sheets when he saw pressure building on his old firm.

Today's 25 percent raise in Morgan Stanley (NYSE: MS) may alleviate some of the pressure on the investment bank to find a merger partner to avoid the same fate as Lehman Brothers Holdings Inc. and Merrill Lynch & Co. (NYSE: MER). Shares in the New York-based company rose $5.28 to $27.83. Morgan Stanley reportedly is mulling a tie-up with Wachovia Corp. (NYSE: WB).

Even Washington Mutual Inc. (NYSE: WM), another company that might get a multi-billion buyout, got a boost, soaring 81 cents to $3.80. That's an increase of more than 27 percent. Of course, the 52-week high is $39.25, so any celebration is muted.

The joy from shareholders about the Paulson buyouts is palpable. Taxpayers are more sanguine. The one thing I remember from Economics 101 -- where my professor used to always use marijuana joints in his lectures about supply and demand -- is that every transaction needs a buyer and seller. What makes the government think it will be any more successful in unloading the toxic paper than the private sector? I just don't see who is going to buy the stuff until there is a major turnaround in the housing market which may not happen for years. Even then, turning a profit will be a challenge.

Homeowners struggling to pay their bills must find the federal government's bailout of troubled Wall Street firms confusing.

After all, government officials have repeatedly said they would not help victims of the subprime mortgage crisis, reasoning that they should not get rewarded for making bad decisions.

It's Economics 101 that people who take bad risks will continue to do so if there are no consequences to their actions. But the $85 billion rescue of American International Group Inc. (NYSE: AIG), the bailout of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), the possible rescue of Washington Mutual Inc. (NYSE: WM) and the shotgun wedding of Merrill Lynch & Co. (NYSE: MER) to Bank of America (NYSE: BAC) brings all of these cherished notions of free markets into question.

Why is the government helping companies who sold mortgages to people who they knew couldn't afford them and repackaged the loans into securities that were unloaded on unsuspecting investors -- but doing little for individual homeowners?

The bankruptcy of Lehman Brothers Holdings Inc. (NYSE: LEH), the sale of Merrill Lynch & Co. (NYSE: MER) and the strain on American International Group Inc. (NYSE: AIG) have put an unprecedented strain on the financial system. Investors looking for a way to recoup their losses are probably out of luck.

If you lost money owning shares of financial services companies, odds of getting your money back are remote. To prevail in an arbitration hearing, investors need to prove fraud such as the broker bought stock without their knowledge, bought stock just to generate commissions (churn), bought it knowing that it was unsuitable, or misrepresented the risks of the investment. These claims are all difficult to prove and even if an investor is victorious, there is no guarantee they will get a full refund.

According to New York securities attorney Mark Astarita, arbitration cases take between 14 and 18 months to resolve. Investors win about 50% of the time. "Stocks go down every day," he said when we spoke earlier today. "There needs to be wrongful conduct" to win a case.

American International Group Inc. (NYSE: AIG), which some are worried may be the next big financial company to fall, had planned to announce its turnaround plan on the 25th. Given the more than 40% decline in the stock over the past month, Wall Street decided it could not wait that long.

According to Bloomberg News, AIG may unveil a restructuring of the company before its self-imposed deadline. The story does not elaborate on this further. Investors are rightly concerned that ratings agencies may cut the debt ratings of the world's largest insurer triggering more than $13 billion in collateral calls that would drain its cash reserves further, according to Bloomberg News.

"The price of credit-default swaps, used as hedges against losses on bad debt, approached distressed levels and traded higher than those for Lehman Brothers Holdings Inc., the securities firm that's fighting for survival," according to the news service.

AIG, which has lost $18.5 billon over the past three quarters, raised more than $20 billion in capital in March. Kathleen Shaney of Gimme Credit told Dow Jones that AIG may have to sell assets in order to head off potentially ruinous debt downgrades.

Treasury Secretary Henry Paulson is steadfastly refusing to bailout Lehman Brothers Holdings Inc. (NYSE: LEH). That's not surprising given that its an election year and that the Democrats complained bitterly about the rescue of Bear Stearns. He shouldn't bail out AIG either. The companies got themselves in this mess. They need to get themselves out of it.

Today, we are taking a break from politics as usual, and that's a good thing.

Republican John McCain and Democrat Barack Obama have called a truce in their increasingly nasty and bitter campaigns to honor the victims of the 9-11 terrorist attacks seven years ago (my, how time flies). They are both scheduled to address a forum on public service being held in New York City, which will be covered by the cable news networks.

It is appropriate that the campaigns call off their attack dogs on the anniversary of the worst terrorist attack in U.S. history. Heck, this would have been a good idea anyway, even if 9-11 never happened. The campaign rhetoric has been at a boiling point. For instance, Obama had to defend himself against charges that he was using the phrase "lipstick on a pig" to insult McCain's running-mate Sarah Palin. I don't think it was sexist and MSNBC's Keith Olbermann pointed out that McCain used the same phrase to attack Hillary Clinton.