September 30, 2008 11:01 AM
You heard from US President, from Fed Chairman and even from Treasury Secretary about the urgency to pass the bailout package and they also warned congress to be ready for ramifications if not passed.
But, are they alone? No, there are many outside screaming loud, urging and pleading to pass the bill. Why? They do not want to import the ramifications of US financial crisis
They know, earlier it is stemmed, it is better. Otherwise, this “CATEGORY 5 CREDIT MARKET HURRICANE” will literally break spine of developed nations that is Financial Markets.
But, it seems nothing can turn this round, neither $700 bn package at a go nor even a bigger package. It took 10 years to create this bubble. Market should be allowed to settle it in its natural course.
Gold is in accumulation stage. Strengthened further, inched closer to $900, yesterday.
Rudd, Brown, Urge U.S. Congress to Pass Bailout Plan (Update1)
By Gemma Daley
Sept. 30 (Bloomberg) — Australian Prime Minister Kevin Rudd joined U.K. counterpart Gordon Brown in urging U.S. lawmakers to pass a financial rescue package and pledged to provide liquidity and take “whatever action is necessary” to ensure stability.
The U.S. congress should approve the proposed $700 billion plan “or a similar measure,” Rudd told reporters in Canberra today. `We’ve obviously sent a message to the White House about the importance that we attach to taking decisive action in America ,” Brown said in London late yesterday.
The House of Representatives voted down the plan yesterday, sparking the biggest decline in the Standard & Poor’s 500 Index since 1987 and erasing $1.2 trillion in market value from U.S. equities. The rout extended to Asian markets today with Japan ‘s Nikkei 225 Stock Average tumbling 4.7 percent and benchmarks in Australia and South Korea each declining more than 3 percent.
“It’s unprecedented for leaders to start trying to heavy hand the Congress,” said John Hart, an Australian National University professor who specializes in U.S. elections and politics. “The problem is these leaders want to keep confidence in their banks.”
Rudd said he supported the leadership of President George W. Bush in tackling the financial crisis and warned that “the consequences of failure on this measure are significant for the U.S. and more broadly.”
Global Economic Impact
Japan ‘s Economic and Fiscal Policy Minister Kaoru Yosano said the rejection of the U.S. bailout “will have a significant effect not only on the U.S. economy, but also the global economy.”
“There’s just no way to insulate Asia’s economy from what’s happening in the U.S. ,” said Robert Dujarric, director of the Institute of Contemporary Japanese Studies at Temple University ‘s Japan campus. “The political ramifications are not good for Asian governments.”
Japan is watching financial markets and coordinating with other countries, Chief Cabinet Secretary Takeo Kawamura told reporters in Tokyo today. He cited Japanese Premier Taro Aso as saying that leaders mustn’t let the financial system collapse, and said that the government may consider measures to prevent further stock-market losses.
Japan and Australia ‘s central banks pumped $20.8 billion into the financial system after money market rates and corporate bond risk rose following the rejection of the U.S. rescue bill.
“Regulators and the Reserve Bank of Australia will do what is required to provide ongoing liquidity,” Rudd said, adding that Australia ‘s banking system is “fundamentally different” to that of the U.S. because of stronger regulation and fewer investments in subprime mortgages.
Australia on Sept. 26 announced the purchase of A$4 billion ($3.2 billion) in residential-backed mortgage securities to help small lenders offer home loans. The first tender is due in December, followed by another early in 2009.
The nation has also extended a ban on short selling, following similar moves in the U.S. , U.K. , Germany , France and Belgium . Short selling is the sale of stock borrowed from shareholders. People who sell short hope to profit by repurchasing the securities later at a lower price and returning them to the holder.
Brown, whose government has rescued three lenders since the financial crisis began, said he will take “whatever action is necessary” to ensure the stability of the British financial system.
To contact the reporter on this story: gdaley
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