Several factors combined to create the financial disaster that was today. I hope this summary provides you the basic overview to satisfy your curiosity. If it does not, links will follow.
The troubles were mounting in the US as Congress was to take up HR 3997 on Monday. HR 3997 was a companion bill to S.3604, sponsored by Senate Majority Leader Harry Reid (D-NV). HR 3997, sponsored by House Ways and Means Committee Chair Rep Charles Rangel (D-NY) came to a vote on third reading today. The bill failed to pass with ayes to the right, 205, noes to the left, 228, and one abstention. By party, 140 Democrats supported the bill whilst 95 opposed it. On the GOP side, 65 Republicans supported the bill whilst 133 opposed it. One Republican abstained from voting.
From a local aspect, Missouri’s nine Representatives voted 4-5 against the bill. Those in support were Democrats Russ Carnahan (MO-3) and Ike Skelton (MO-4) and Republicans Jo Ann Emerson (MO-8) and Minority Whip Roy Blunt (MO-7), who voted with the party leadership. Those opposed were Democrats Lacy Clay (MO-1) and the Rev Emanuel Cleaver (MO-5) and Republicans Todd Akin (MO-2), Sam Graves (MO-6) and Kenny Hulshof (MO-9). Rep Hulshof is the Republican candidate in the Missouri gubernatorial race. The latest poll, dating from 24 September puts Hulshof 14 points behind current Missouri Attorney General Jay Nixon. Nixon has not commented officially on the bill, but both his campaign and the Missouri Democratic Party have been critical of Hulshof’s voting record, especially when it comes to the economy.
After the bill’s stunning defeat, global markets tumbled. European markets had a rough day, even though they closed before the House vote. Benelux bank and insurance giant Fortis received a $16 million injection from the governments of the Netherlands, Belgium and Luxembourg. British bank Bradford & Bingley was nationalised today with the $40 billion savings department sold to Spanish retail bank Santander Group. Earlier today, Wachovia was saved by a buy-out from cash-strapped Citigroup. After the news of the House vote around 15h00 EST, the Dow-Jones Industrial Average fell 777.68 points (6.98%) to 10,365.45. This sell-off set the record for the largest one day sell-off in the market’s history. Likewise, the Nasdaq fell 9.14%, the S&P 500 8.81% and the Toronto Stock Exchange (TSX) fell 840.93 points (6.9%), also setting the record for largest sell-off in Canadian history. In commodities trading, light crude fell to $95 a barrel whilst gold rose $5.40 to $894.40 per ounce. In the last hours of trading, the dollar fell to €0,70 (euro), 55p (GBP) and C$1.03 (CAD).
Markets worldwide are expected to suffer. The Australian banking authorities have banned short-selling for 30 days to fight the panic, but in the first 30 minutes of trading, the S&P/ASX200 fell 254.7 points. The Tokyo Stock Exchange fell 57.71 in the same time and the Hang Seng Index (Hong Kong) fell 801.41 points.
Sources
bbc.co.uk, cbc.ca, cnn.com, wikipedia.org, house.org, senate.org, abc.net.au, missouridems.org, jaynixon.org, finance.google.com, x-rates.com, djindexes.com, mogop.org, kenny08.org, hkex.com.hk, tse.or.jp, asx.com.au
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