I had a strong feeling this financial rescue package would pass and I turned out to be right. The US House of Representatives voted in favor of the $700bn financial rescue plan after rejecting an earlier version. The 263-171 vote was the second in a week, following its shock rejection of an earlier version on Monday. The package is aimed at buying up the bad debts of failing financial institutions on Wall Street.
The financial markets reacted favorably (as expected) to this event and as a result but the Dow still finished down. I’m curious to see if we would see another huge gap in foreign exchange rates once they currency markets open on Sunday evening. I’m actually expecting the EUR/USD to gap about 100+ pips (points). We shall see.
An interesting item for you folks to consider. Texas Republican Jeb Hensarling asked: “How can we have capitalism on the way up and socialism on the way down?” Yes indeed, how come it is always the case that when the so called “capitalists” get themselves in a big mess they run to big daddy State to rescue them. Ponder that for a bit. The United States of America is far more socialistic than people would care to admit.
A similar crisis will happen again in the future. Mark my words. It simply has to do with the basic working of the fiat monetary system. But anyways, my own two cents aside, for now it seems “disaster” has been averted and the big banks and other financial gamblers can go back to playing with their derivatives and other complicated financial playthings.
Have a wonderful and stress free day everyone.
Cheers,
Alan