Senate to vote on financial rescue plan on Wed.

NF Reporter · 09-30-2008, 08:20 PM

AP - In a surprise move to resurrect President Bush's $700 billion Wall Street rescue plan, Senate leaders slated a vote on the measure for Wednesday — but added a tax cut plan already rejected by the House. Majority Leader Harry Reid, D-Nev., and GOP Leader Mitch McConnell of Kentucky unveiled the plan Tuesday.

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waltky · 10-01-2008, 03:18 AM

Is the market correcting itself?...

US Stock Prices Soar, Gaining Back Half of Monday's Huge Loss
30 September 2008 - Financial markets continued to see-saw world-wide Tuesday, but US markets soared on expectations that Congress will later this week approve the financial rescue legislation that failed in the House of Representatives on Monday.

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The Dow Jones Industrials gained 485 points or 4.7 percent to close at 10,850. The advance was the biggest daily gain in six years, recovering more than half of Monday's huge nearly nine-percent plunge. The advance was fueled by statements from both presidential candidates saying they favored the administration's $700-billion line of credit that would allow the government to buy up the bad loans of the banking industry. President Bush also expressed optimism saying that Monday's defeat was not the end of the legislative process.

On Wall Street, trader Teddy Weisberg of Seaport Securities said the financial rescue is in the interests of all Americans. "Because what happens in the financial system basically drives our economy at every level," said Teddy Weisberg. "And if the financial system freezes up and breaks down it will have ripple effects not only throughout our economy but the world's economies."

Weisberg spoke on Marketwatch.com. Overall, the US stock market had its worst September since 2002 with the Standard and Poors Index registering a nine percent decline. In Europe stock prices fell and currencies tumbled on news that banking authorities were extending lifelines to several financial institutions. The euro, the common currency of 15 European Union nations, had its biggest daily decline against the dollar since 2001. The euro fell 2.4 percent to $1.41. The British pound was again down sharply, declining to $1.77.75. The pound was trading at $2 just three months ago. Gold lost $13 to under $881 an ounce.

VOA News - US Stock Prices Soar, Gaining Back Half of Monday's Huge Loss

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South African Economist Calls US Turmoil Crisis of Confidence
30 September 2008 : The failure of US lawmakers to pass the $700 billion financial bailout package – and the historic plunge on wall street Monday – are being watched closely around the world.

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South African economist David Shapiro, acting CEO of Sasfin Securities, says this crisis is unlike any other. From Johannesburg, he spoke to VOA English to Africa Service reporter Joe De Capua about Wall Street's 777-point drop Monday. "What you have to realize is that is the biggest drop in history. In fact, the drop was greater than after 9/11. And also what you have to remember is that it's (stock market) already been under pressure. The depth that markets have fallen is quite incredible," he says.

Asked whether he was surprised by the failure Monday to approve the legislation in the House of Representatives, Shapiro says, "I was surprised because I have great respect for (Treasury Secretary Henry) Paulson. The work that he has done to try and turn things around -- he has worked tirelessly. I have a great respect for (Federal Reserve Chairman Ben) Bernanke. I think they are clever men. They understand the market that they're in. They didn't create it and what they're trying to do is to correct what's gone wrong in the past. They're almost as ashamed as everybody else is about Wall Street, but that doesn't help anybody. The thing is to try and resuscitate the global economy -- first of course, to resuscitate the US economy…. But they had warned Congress that if you don't let this package go through the consequences will be dire."

Shapiro says warnings came from elsewhere as well. "Even respectable magazines like The Economist have come out and said, look, we don't know what the perfect package is, but they say some package has to be passed. It's better to have a bad package than no package at all," he says. As for those advocating free market principles during the crisis, letting the market take its own course, Shapiro says, "It's too late for that. To get free market adjustments, for example, adjusting their accounting laws…bringing in some tax concessions and all issues around that are going to take weeks and months to push through. By which stage, I think banking lending would have frozen up and the US economy would have just ground to a halt…. We need to bring confidence again into the US economy. We need bankers to feel that they will be able to rebuild their balance sheets."

He says it's possible a bailout package could eventually yield a profit for the American taxpayer. He says as the crisis continues, investors will turn their attention to other large economies, such as India and China, for profitable ventures. Shapiro calls it a crisis of confidence. "It starts with the banks. The [Federal Reserve] has made billions of dollars available to lend. But the banks are very nervous to actually lend it out. So even though the money is available to them, they're very scared. They're protecting their balance sheets. But holding back on lending to other banks, who in turn feel the pressure and in turn start to collapse," he says.

VOA News - South African Economist Calls US Turmoil Crisis of Confidence

waltky · 10-02-2008, 08:08 PM

New uncertainty over bailout bill in House...

Some House 'no' votes turning to 'yes'
2 Oct.`08 WASHINGTON - Several Republicans try to force a vote on reducing $700 billion rescue plan

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The uncertainty over passage of the $700 billion financial sector rescue bill got deeper Thursday when both fiscally conservative Democrats and a group of House Republicans sharply criticized the bill as it stands. They did not announce whether they’d vote for it or against it. Rep. Mike Ross, D-Ark., a leader of the 49-member, fiscally conservative group of Democrats known as the Blue Dog Coalition, said his members were unhappy with the bill. He said they had to decide whether to seek to amend it, or perhaps seek to defeat it.

“One of the options is we may have to swallow this on behalf of the American economy,” Ross said. Ross voiced anger at Senate Majority Leader Harry Reid for adding a package of extensions of expiring tax breaks to the bill. “Twenty-five Blue Dogs voted for the bill on Monday. He put all of those 25 votes at risk” by adding the tax breaks to the bill, Ross told reporters. Ross was one of the 25 Blue Dogs voting "yes" on Monday. A veteran Democratic lobbyist who is working on the bill for his clients predicted the bill would pass Friday when it comes to final vote. “It would be a disaster for Democrats for this not to pass,” said the lobbyist who spoke on condition that he not be named. “Barack Obama flew back from the campaign trail to speak on the Senate floor for this. Democrats have to deliver. I don’t know how you could let this fail —you can’t.”

He predicted “this is going to get 220, not 235” votes for the bill and estimated that fewer than 100 Republicans will end up supporting it. One major reason, he said, that it would pass is that “the entire business community is on this,” ranging from the Chamber of commerce to wind energy producers. The bill appeared to be gaining some momentum: the Associated Press reported that Republicans Zach Wamp of Tennessee, Ileana Ros-Lehtinen of Florida, and Jim Ramstad of Minnesota had switched from opposing the bill to supporting it. The key question: Were these the kind of loud complaints that members sometimes express — just before deciding to support their party’s leadership and vote “yes”? Or was the discontent serious enough to derail the bill?

A move to pare back the bill