Congress has passed the $700 billion U.S. rescue package, just four days after voting down the original version.
Now all eyes have turned to the market’s reaction. Will this free up North America’s lock-tight credit markets? Who knows. It may take a while for the U.S. treasury to buy up all the rotten assets plaguing American banks. In the short-term, it’s possible that lenders may still be unwilling to loosen up credit to any great extent.
On one positive note, CEP says LIBOR (the international overnight bank-to-bank lending rate) has improved dramatically.
Here is the rest of the market’s reaction following this historic vote:
- TSX: +1.19%
- Dow Jones Industrials: +0.45%
- 5-year Canadian bond yield: -0.07% to 2.96%
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Last modified: April 25, 2014
MT,
The 700 billion dollar bailout is really 850 billion dollars. Why? Since votes were needed to pass the bailout, more money was added to make it pass. More tax-cuts, etc. In the end the tax payers will feel the pain.
regards,
Brian
Hi Brian, I think you’re right that the headline $700 billion pricetag will likely be a “bit” shy. I’ve heard estimates well over a trillion dollars when all is considered. Of course, proponents feel the U.S. government will get it all back. Hopefully they’re right. – Rob