Bailout rejected

Shock vote sends global markets sliding

NEW YORK/WASHINGTON — US lawmakers rejected a $700 billion bailout plan for the financial industry in a shock vote that sent global markets sliding as the world credit crisis claimed more banks.

By a vote of 228-to-205 the House of Representatives rejected a compromise plan that would have allowed the Treasury Department to buy up toxic debt from struggling banks.

The plan’s defeat sent US stocks down sharply, with the Dow Jones industrial average briefly falling more than 700 points, its biggest intraday drop ever.

Shares had already been under pressure following sharp declines in Asian and European shares on fears the crisis was spreading. Global money markets remained frozen, even as central banks poured in cash in an attempt to boost liquidity.

Capping three hours of debate on Capitol Hill, House majority leader Steny Hoyer of Maryland had warned lawmakers that the cost of inaction would be an economic calamity beyond Wall Street.

“A meltdown would begin, it is true, on a few square miles of Manhattan, but before it was over, all of us know, no city or town in America would be untouched,” Hoyer said.

When the contentious bailout plan was announced by the Bush administration last week, some House Republicans balked at spending so much taxpayer money just before US elections.

Republican House members voted against the bailout by a more than 2-to-1 margin. A majority of Democrats voted in favor.

US President George W. Bush was scheduled to make a statement on the rescue package at 12:45 GMT Tuesday (8:45 p.m. in Manila) after meeting on Monday with economic advisers including Federal Reserve Chairman Ben Bernanke to consider the administration’s next move.

“I was disappointed in the vote that the United States Congress (had) on the economic rescue plan,” Bush told reporters in Washington. “Our strategy is to continue to address this economic situation head-on and we’ll be working to develop a strategy that will enable us to continue to move forward.”

The Senate returns on Wednesday and the House on Thursday after a break for the Jewish New Year holiday of Rosh Hashanah. No laws can be passed in their absence but their staffs could work on a revised plan.

The showdown on the bailout proposal came too late for Wachovia Corp, which agreed to sell most of its assets to Citigroup Inc. in a deal brokered by the Federal Deposit Insurance Corp.

The Dow Jones industrial average was down more than 4 percent and the broader S&P 500 index was down nearly 6 percent. Oil fell $8 a barrel.

Earlier, European shares dropped to a three-and-a-half year closing low with bank shares weighing heavily.

“Investors are fearful, frenetic, especially when it comes to banking shares. They want to get out now and see the after effects from afar,” said Frank Geilfuss, head analyst at Bankhaus Loebbecke.

Around the world, investors were dumping assets they regarded as risky. World stocks were down sharply, while gold and US Treasuries surged in the rush to safety.

The world’s central banks, led by the US Federal Reserve, announced a $330 billion expansion of currency swap arrangements, which allows them to increase the amount of money they can provide in their home markets, effectively throwing more money at the crisis.

Earlier, the governments of Belgium, the Netherlands and Luxembourg moved to partly nationalize Belgian-Dutch group Fortis NV with an injection of more than $16 billion, and German lender Hypo Real Estate Holding AG secured a credit line from the German government and banks of up to 35 billion euros.

British mortgage lender Bradford & Bingley Plc was brought under the government’s wing, shares of French bank Dexia tumbled on a report that it might need emergency capital, and bank rescue deals also emerged in Iceland, Russia and Denmark.

“The contagion is spreading to mainland Europe and everyone’s asking, ‘Who’s next?’” said Mark Sartori, head of European sales trading at Fox-Pitt, Kelton in London.

As investors raced for safe havens, Asian stocks trimmed deep early losses after Wall Street’s biggest fall since the crash of 1987.

“It’s hard to imagine what’s going to happen. It’s kind of scary,” said Masayoshi Okamoto, head of dealing at Jujiya Securities in Tokyo. “In particular, European banks were putting up a front that nothing was wrong, but now they’re falling one after another.”

Shares in Asia recovered from early lows but were still down about 3 percent.

Oil fell on fears of further economic slowdown, and the Japanese yen hit a 4-month high.

Investors worried that a collapse in financial markets would tip the United States economy into a painful recession that drags the rest of the world down with it.

“We do not rule out a US recession being deep and long and having a severe global impact,” said Gerard Lyons, chief economist at Standard Chartered in London. – Reuters (Malaya)


My Take:

Just watched the “Illuminati” documentary.

And it makes me think about the possibility that the Illuminati’s are going bankrupt and they wanted to use the American taxpayer’s money to cushion their fall and retain their grasp on the money.

The thought makes me shiver.

Just thinking aloud.

One Response to “Bailout rejected”

  1. James Raider Says:


    The White House and Congress continue with misguided policies, and incompetent distribution of taxpayer money.

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