Friday, October 03, 2008

US bail out plan passes as law

The so called bail out plan, rescue plan as it is now being dubbed, has been passed at congress by the House of Representatives bringing some hope to financial markets. The bill which failed on Monday, passed tonight with 263 voting in favour with 171 voting against. Nancy Pelosi, the House Speaker, signed the bill before passing it to George W Bush whose signing off on it will make it law.

But while there was a sense of relief on the congress floor and at Wall Street, not everyone is happy. Countless emails have poured into TV stations expressing their disappointment with the passing of the legislation. “No matter how much lipstick you put on this bill it is still a pig” one American taxpayer wrote to CNN. Others were angry that those blamed for causing the crisis haven’t been targeted and that taxpayers have been forced to pay for the bail-out. One e-mailer wrote to Sky News saying “Why are we bailing out the people who created the crisis?”
In a statement by President George W Bush he said “We have acted boldly to address the crisis on Wall Street” and said he was going to sign the bill. He thanked the work of both houses and asked for continued bipartisan cooperation to help maintain America’s “leading role on the global economy”. The bill, he said, would give “new tools to government” to fight the crisis and bring about a change to the financial markets so that people may once again obtain loans for “cars, homes and for college education”. He addressed the concerns raised by critics saying the bill protected taxpayers and insisted that “Once the market recovers, over time the tax dollars we paid will be paid back.” He said that the financial crisis had brought about a situation where action was “clearly necessary”.

This was very much the opinion of a number of television pundits. Jeffrey Hogan, a so called financial expert, told Sky News it was a “Necessary first step”. He insisted that “The problems are so severe that the markets wouldn’t self correct and it was necessary to act and to stop a fire becoming an inferno”. The ‘fire’ has already left thousands jobless, with more than 159,000 being made redundant in September alone. The figure for the year stands at 750,000. Following the failure of the first draft stocks crashed with the Dow dropping 777 points. As the bill was passed the US markets reacted positively and began to rise significantly. Within an hour the Dow was up 196 points but there are still fluctuations of uncertainty.

Jonathan Miller of Miller Samuel speaking on Bloomberg said the crisis was far from over and hardships would continue for many Americans. “There will be two million foreclosures in the coming year” he warned. The roller-coaster ride is not over yet [BBC / Sky / CNN]

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