BYE BYE BAILOUT
Financial Fears Mount as Congress Heads for Holiday http://www.spiegel.de/international/business/0,1518,581444,00.html
By Marc Pitzke in New York
Financial Fears Mount as Congress Heads for Holiday http://www.spiegel.de/international/business/0,1518,581444,00.html
By Marc Pitzke in New York
One day after the House of Representatives shot down the $700 billion bailout package for Wall Street, many fear that the markets will plunge further. Political leadership, though, will have to wait -- until after a two-day holiday.
As if Monday wasn't bad enough: The US House of Representatives in chaos; the markets in freefall; the surreal appearances of two presidential candidates, both of whom swore bipartisanship only to attack each other in the very next breath.
On Monday, the US House of Representatives failed to pass the much-touted $700 billion Wall Street bailout.
AP
And yet, as strange as Monday seemed, the day could very well be trumped by the rest of the week. The spotlight will likely be focused on stock market trading floors to see just how traders and investors react to Congress'
shocking rejection of the $700 billion bailout package. But when it comes to scurrility, it will be difficult to beat the halls of the US Capitol, ground zero of this economic catastrophe.
Or, to be more precise, in the empty halls of the Capitol. After the US Representatives drop-kicked the bailout bill, triggering another Black Monday -- and leading to a 777.68 point drop in the Dow Jones industrial average -- Congressmen and women headed home to their constituencies. The occasion is Rosh Hashana, a congressional holiday.
It is difficult to believe, but on the day after the disaster, the doors of political process in Washington are closed and will only be opened for business again on Thursday. And even as Rosh Hashana traditionally marks a period of limited trading on Wall Street, it isn't just those in the financial world who will be looking in vain to Washington for some sort of political leadership amid the market storm.
"It is understandable that some in Congress won't come to work (on Tuesday)," political analyst and former presidential advisor David Gergen said on CNN on Monday evening. "But entire delegations?" Someone, he said, has to hold onto the reins "to avoid a total panic."
Instead, the markets are on their own. And just what the next act in the ongoing drama might look like became clear when the markets in Asia and Europe opened their doors on Tuesday. Japan's Nikkei 225, Asia's largest market, plunged 5 percent in the first hour of trading with benchmark indexes in South Korea, Australia and New Zealand likewise dropping by more that 4 percent. In Europe, Germany's DAX dropped 2 percent in the opening minutes of trading to hit a two year low before partially bouncing back.
Many other markets in Europe likewise fell, with the London FTSE dropping by 3 percent.
On the whole, however, markets in both Asia and Europe seemed less volatile on Tuesday than the dramatic fall of US markets on Monday. In just six and a half hours on Monday, US markets lost $1.2 trillion in value -- some $3 billion every minute.
Monday was also a political disaster in the US, especially for US President George W. Bush and his Secretary of the Treasury Henry Paulson. Both had thrown their weight behind the bailout plan and urged those in their own party to support it.
In the end, though, their failure to do so will go down in history. Fully
133 Republican Representatives and 95 of their Democratic counterparts cast their votes against the controversial bailout plan. It was a bill that Wall Street yearned for, but it was unpopular among US voters -- and with all
435 Representatives up for re-election in November, many sacrificed the nation's financial health on the altar of short-term political considerations.'
As if Monday wasn't bad enough: The US House of Representatives in chaos; the markets in freefall; the surreal appearances of two presidential candidates, both of whom swore bipartisanship only to attack each other in the very next breath.
On Monday, the US House of Representatives failed to pass the much-touted $700 billion Wall Street bailout.
AP
And yet, as strange as Monday seemed, the day could very well be trumped by the rest of the week. The spotlight will likely be focused on stock market trading floors to see just how traders and investors react to Congress'
shocking rejection of the $700 billion bailout package. But when it comes to scurrility, it will be difficult to beat the halls of the US Capitol, ground zero of this economic catastrophe.
Or, to be more precise, in the empty halls of the Capitol. After the US Representatives drop-kicked the bailout bill, triggering another Black Monday -- and leading to a 777.68 point drop in the Dow Jones industrial average -- Congressmen and women headed home to their constituencies. The occasion is Rosh Hashana, a congressional holiday.
It is difficult to believe, but on the day after the disaster, the doors of political process in Washington are closed and will only be opened for business again on Thursday. And even as Rosh Hashana traditionally marks a period of limited trading on Wall Street, it isn't just those in the financial world who will be looking in vain to Washington for some sort of political leadership amid the market storm.
"It is understandable that some in Congress won't come to work (on Tuesday)," political analyst and former presidential advisor David Gergen said on CNN on Monday evening. "But entire delegations?" Someone, he said, has to hold onto the reins "to avoid a total panic."
Instead, the markets are on their own. And just what the next act in the ongoing drama might look like became clear when the markets in Asia and Europe opened their doors on Tuesday. Japan's Nikkei 225, Asia's largest market, plunged 5 percent in the first hour of trading with benchmark indexes in South Korea, Australia and New Zealand likewise dropping by more that 4 percent. In Europe, Germany's DAX dropped 2 percent in the opening minutes of trading to hit a two year low before partially bouncing back.
Many other markets in Europe likewise fell, with the London FTSE dropping by 3 percent.
On the whole, however, markets in both Asia and Europe seemed less volatile on Tuesday than the dramatic fall of US markets on Monday. In just six and a half hours on Monday, US markets lost $1.2 trillion in value -- some $3 billion every minute.
Monday was also a political disaster in the US, especially for US President George W. Bush and his Secretary of the Treasury Henry Paulson. Both had thrown their weight behind the bailout plan and urged those in their own party to support it.
In the end, though, their failure to do so will go down in history. Fully
133 Republican Representatives and 95 of their Democratic counterparts cast their votes against the controversial bailout plan. It was a bill that Wall Street yearned for, but it was unpopular among US voters -- and with all
435 Representatives up for re-election in November, many sacrificed the nation's financial health on the altar of short-term political considerations.'
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