Bailout Dead. Markets Plunging.

U.S. lawmakers shot down the proposed bank bailout plan.  The vote was 228-205 against.  Global equity markets are now in freefall, with the Dow Jones Industrials down 669 points (-6.01%) and the TSX down 912 (-7.52%).

Government bonds are rocketing higher as traders rush to safety.  Canada’s 5-year yield is now 2.90%, having dropped almost 1/4% since Friday.

A new bailout plan is not expected soon, but we’ll see.  For now, the markets are on their own.

“Failure was not an option,” says RBC strategist T.J. Marta, who predicts the dead rescue plan will cause a financial markets breakdown. (CEP)

  1. Seeing some lenders in the US are in trouble and some Canadian lenders (banks and life insurance cos) are exposed to the US market a bit,
    what do you think the impact will be on the Canadian availability of credit in general?
    I think that ALL lenders will become pickier and or turn off the credit taps and hence average buyers will have harder time finding a mortgage and developers as well for new construction projects.
    What are peoples thoughts on this? Is cash going to be king in a market where credit is scarce?

  2. Nic, For the short term at least, the availability of Canadian credit will diminish–and already has. Judging from bond yields today, cash is king in that respect. But things can change quickly after the market’s emotions die down.
    Womp, A lot of people would agree with you. The free market should be able to heal itself. If it takes time, and the pain is great, then that might be the only way to ensure something like this doesn’t happen again–for decades at least.

  3. This is fun.
    Up 800 points.
    Down 800 points.
    Up 500 points.
    Weeeeeeeee…..
    Weeeeeeeee…..
    gurgle, gurgle, gurgle…
    …curls up in a foetal position and sobs…then laughs….then sobs…

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