US $700 billion bail out rejected

Grovelawn Financial News 30/09/2008

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Talks to resume next week

Stock markets across the globe have opened amidst chaos and uncertainty following the US Congress’s last minute ditch of the $700 billion bail out.

The rejection of the bail out has sent a shock through the banking industry worldwide and has triggered fears of a further wave of financial disasters as more banks could face ruin.

The rescue scheme had been put together by the US Treasury Secretary Henry Paulson. The plan was to use $700 billion fund that would have been used to buy bad or “toxic” assets on the books of the world’s largest banks, the bail out would have cost American tax payers thousands personally and had come up against fierce opposition.

Talks broke down yesterday but it is hoped they will resume again next week by Thursday once the Jewish New Year has finished.

Within the first hour of opening the FTSE 100 rose by 14.3 points to 4,833.14 against yesterday’s decline of 269.7 points. Shares in London dropped by 145 points, banks led the FTSE 100 index of blue chip stocks falling by almost 3 per cent.

On Monday the Dow Jones industrial average fell by 7 per cent, on Tuesday the Dow Jones was up 150 points. Asia’s investors panicked as Japan’s Nikkei index fell by 4.1 per cent to a three year low. Hong Kong’s Hang Seng index fell 2.4 per cent; the Australian S&P/ASX-200 index closed 2.4 per cent down.

← Nomura buys part of Lehmans | News For September 2008 | EPC's are required for England & Wales from today →

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