Judgement Day

The past month’s events have been truly chocking for the financial markets. Bank failures and government bail-outs have become all too common as front page news; something the recently rejected bill might have helped put an end to (if it hadn’t been rejected that is).

Both US and European shares have plummeted after the $700bn US bail-out (sorry, national investment strategy) bill was rejected by the House of Represenatatives on Monday. President George W Bush (and others) were very disappointed by the vote’s result (228 to 205). About two-thirds of Republican lawmakers as well as 95 Democrats refused to back the rescue plan.

Why this rejection?

Well there has been a certain blame game going on recently, with John McCain accusing Democrats of seeking an unhelpful partisan approach in the debate. One might, on the other hand, wanna consider another fact for a change; American voters view of the crisis. So far voters have seen the financial turmoil as a welfare scheme for the capitalists of Wall Street, not as something that affects their lives on Main Street.

I am glad the bailout bill failed. I work five days a week, save cash and pay my bills. I did not want to pay for Corporate America’s greed -Lisa, Baltimore (BBC)

With the bill not only giving unlimited power over a tremendous (more-than-you-can-ever-imagine) amount of money to Treasury Secretary, Henry Paulson, but also adding another $2,300 to every American’s share of the national debt, or $15,000 per household, ($1.8 trillion in total) this view of the crisis should not have come as a surprise.

Saying this, that sentiment might change if the problems deepen and people suddenly see unemployment rising because businesses cannot get money from the banks to pay their bills and honour their payrolls. However when this happens it will be too late, something the two presidential candidates are well aware of; both of them urged politicians to work together to pass emergency legislation. Speaking on the campaign trail, Mr Obama warned that without action by Congress “millions of jobs could be lost, a long and painful recession could follow”. As Mr McCain told members of Congress to go back to the drawing board “immediately” and work out a new deal, Mr Obama let ordinary people know that he thought it was an outrage that they were being asked to clean up Wall Street’s mess;

“If I am president I will review the entire plan on the day I take office to make sure that it is working to save our economy and you get your money back.”  

He added: “There will be a time to punish those who set this fire, but now is the moment for us to come together and put the fire out.”

There might be a break through tonight when the U.S. Senate (including John McCain, Barack Obama and Joe Biden) will vote on a new version of the original bail-out plan (I cross my fingers). This new version includes several “pleasing” new clauses, one of which will raise the government’s guarantee on savings from $100,000 to $250,000. The vote comes as senior Democrats pledged to find a bipartisan solution which highlights the importance of understanding each other and being able to make compromises;

“Working together, we are confident we will pass a responsible bill in the very near future,” Senator Harry Reid and House of Representatives Speaker Nancy Pelosi wrote to President George W Bush. (BBC)

As the crisis causes havoc on the worlds financial markets all eyes will be on the US Senate as they cast their votes tonight; the outcome here (and, later, in the House) will determine the future of the global economy.

— Kajsa, Admin Future for America
politics.of.tomorrow@gmail.com

~ by politicsoftomorrow on October 1, 2008.