The UberBailout is on the clock according to both sides.  There’s a basic skeleton of a deal out now that would phase in the $700 billion over time:

The chairman of the House of Representatives Financial Services Committee said the $700 billion U.S. officials want for a financial services bailout would be doled out over time rather than granted all at once.

Rep. Barney Frank, interviewed on CNBC television, indicated a deal on legislation to authorize the fund was near. It would include curbs on compensation for executives whose companies are able to sell bad assets to the government.

“There will be some phasing in of the $700 billion, there will be some equity protection … for the taxpayers, there will be restrictions on CEO compensation for those companies that participate, there will be very strong oversight, there will be strong efforts to reduce mortgage foreclosures,” the Massachusetts Democrat said.

…at the same time the Republicans like Richard Shelby are saying the two sides are still pretty far apart.

Sen. Richard Shelby, the ranking Republican on the Senate Banking committee, emerged from a closed-door meeting about the mortgage plan at the White House and said no deal had been reached yet. “I don’t believe we have an agreement,” Shelby said. Shelby has emerged as an opponent of the Paulson plan in recent days. Shelby talked to reporters briefly and then re-entered the meeting.

Then again Senator Shelby is pretty damn crazy, his brilliant idea is just to have the Fed magically produce the money out of its ass and skip the taxpayer altogether.  Wall Street naturally seems to be confident a deal will be reached tomorrow, the Dow jumped 196 points in Dead Cat Bounciness.

So what’s the deal?  Which one of the four scenarios are we looking at here?

Right now I’m not sure.   Congressional Republicans seem bound and determined to be on the “no deal” side of things.  Democrats are acting like they’ve gotten all the nifty provisions they’ve wanted, but it still means throwing billions at a problem that we’ve already thrown billions at.  Remember,  ultimately neither side wants to do this, it’s political suicide to turn into the bums everyone wants to throw out.

Still, both sides are quite beholden to the corporate interests that run this country.  Those that aren’t don’t stay in Washington long at all.  Meanwhile as I said, the clock is ticking:  WaMu is shopping for a deal (and they are getting plenty of Fed help) as the evidence mounts that it won’t survive the weekend, and Helicopter Ben may have no choice but to toss out another rate cut to stoke the furnace.

If there’s not a bailout on the President’s desk by the time WaMu goes under, things may get Very Very Bad(tm).  We’re already seeing the results of the credit crisis, and the honest truth is the UberBailout won’t fix it.  Liquidity is NOT the issue:  basic insolvency is.  The latter is causing all the problems with the former, and this does nothing to help the former.

As long as housing prices keep falling (and they will) we have not hit bottom yet.  And it anything, the rate of decline in the housing market is actually increasing now.

Sales of new U.S. single-family homes in August fell to its lowest point in more than 17 years while prices hit four-year lows, a government report on Thursday showed, in a sign of continued weakness in the housing sectorn.

The annual sales pace was down 11.5 percent from July to 460,000 homes and was sharply off the 510,000 pace expected by economists. The August decline was the biggest since November 2007.

The median sales price of $221,900 was off 5.5 percent from July, the lowest since $211,600 in September 2004.

The August sales pace was the weakest since 401,000 in January 1991.

Much more pain is ahead folks.  The UberBailout won’t do a thing to stop it.  It’s not a question of a soft landing.  It’s not a question of keeping the economy from crashing. The question is how many casualties will the impact of hitting the housing bottom cause, and how widespread the damage will be.  It’s looking to be global at this point, other countries are already crawling into their economic bomb shelters.

You can forget both candidate’s promises of health care and clean energy and new jobs.  They’re not going to happen.  Whoever is President is going to be spending all their time trying not to be Herbert Hoover.

It’s just a question of how many individual elements will survive the coming systemic meltdown.

Be prepared.

Cross-posted at ZVTS.