Stock Market Information

Well for better or for worse, the estimated $700 billion dollar bailout plan recently passed the House and the President’s desk as well today. The markets responded blandly, especially after a jobs report pegged losses at a seven and a half year high. President Bush spoke confidently about what this meant for the nation’s future:

“By coming together on this legislation, we have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country,” Bush said less than an hour after the House voted 263 to 171 to pass the bill.

Not everyone was so optimistic, many Republicans like Senator Ron Paul raised concerns about what long term effects this bill could have for inflation and the value of the dollar. At a time when the government is already running the largest deficit in history, that seems to be a valid concern, but most politicians stressed that the crisis was severe enough to warrant it.

The new bill puts in some important changes to the market place. Most importantly it allows the Treasury Secretary to purchase up to $700 billion in “troubled” assets in order to free up the credit markets that have been paralyzed by mortgage securities that no one wants. No one apparently, except Uncle Sam.

Henry Paulson said that there would be swift action to put the bill into place and to carry out the plan as quickly as possible to get the money where it needed to go. The bill passed despite wide criticism by many Republicans thanks to “sweeteners” designed to entice votes from various states. These included a number of unrelated pork projects like tax breaks on wooden arrow makers and breaks for rum producers.