Shamik Das


Monday, September 29, 2008

Unlucky number 777 as Dow suffers record fall after Congress rejects Paulson's $700 billion rescue plan

What now? Congressmen reel away in shock following today's unexpected result

ANOTHER day, another catastrophe for the free world following the news this evening that the House of Representatives voted down President Bush's $700 billion bailout of Wall Street.

Shares plummeted by up to ten per cent within minutes of the vote, news of which broke around 2pm local time with the Dow Jones and NASDAQ in freefall upon hearing the unexpected result - the Dow ending the day 777 points down at 10,365.45, the biggest daily fall in its history.

In London, meanwhile, the FTSE is sure to hit yet more turbulence when markets open in the morning and traders have a chance to respond to events in Washington.

The FTSE 100 had closed down five per cent at 4,818.77 points even before news of the Congress vote, largely as a result of the nationalisation of Bradford & Bingley, Nat West owner Royal Bank of Scotland down 20 per cent at one point.

But it it is the United States where the fallout will be most keenly felt, not least in the race for the White House, with Democrat candidate Barack Obama quick to exploit the situation, calling on Democrats and Republicans alike to "step up to the plate".

He added: "Get it done - and understand that even as you get it done to stabilise the markets, we have more work to do to make sure that 'main street' is getting the same kind of help as Wall Street is getting.

"We cannot forget who this is for. This is for the American people. This shouldn't be for a few insiders."

Unrepentant: Henry "Hank" Paulson remains steadfast in his belief that a solution will be found

Henry Paulson, US Treasury Secretary and architect of the plan, was adamant a deal would be reached. "We've got much work to do and this is simply too important to let fail," he said. "We need to put something back together that works; we need a plan that works.

"We need to work as quickly as possible and I'm going to consult legislators as soon as possible. We need to get something done. We're committed to working with Congressional leaders to get it done."

Dr Paulson also defended the failed rescue package: "We had a plan we worked very hard on, we gave them the tools they needed.

"Our banking system has been holding up very well considering all the presures. We're taking strong action, essential action to protect the economy. We will continue to work with what we have. We need it done as soon as possible."

"We put forth a plan that was big because we've got a big problem," added President Bush. "Our strategy is to continue to address this economic situation head-on.

"We'll be working to develop a strategy that will enable us to continue to move forward."

I can't wait to see what Robert Peston and Paul Mason have to say about it on The Ten O'Clock News and Newsnight in the next hour. For today's business journalists it must feel like the Anschluss and Great Depression all rolled into one; there's no news like bad news, eh boys?!

Live coverage of tonight's breaking news from the BBC
Robert Peston's blog

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