Inside Story - Bailout vote - 01 Oct 08 - Part 1
Al Jazeera English
Transcript
the future of the US economy perhaps the global economy is now in government hands and as people look to their elected leaders for a way out of the Quagmire they're also looking to their future will their money be spent wisely or will the severe Market reactions dictate how deep they eventually have to dig and what is to stop all this happening all over again the global financial crisis and how it affects you this is Inside Story hello I'm Kamal Santa Maria billion dooll bailouts Banks going bust Brokers bulking at the borses the world's financial markets are quite simply in a mess but on today's Inside Story we're going beond Wall Street we're going be on Capitol Hill we are looking at this crisis from street level why is so much taxpayer money needed to fix the system and is the American public if not the entire glob public properly informed on the situation and perhaps more importantly how can this all be stopped from happening again because people are quite rightly anxious about their money and their future let's start with a small sampling of some of those people it seems anytime the government gets involved in something they mess it up so most people in America have credit and savings and um and we're all concerned as to what's going to happen to all of our money and whether or not we're going to be able to buy homes and and get credit and those types of things if we fail at this it's going to be devastating even out in the wheat cattle country of Montana it's going to be devastating even to us I don't think we should be paying for it and I'm glad that there's some hesitation but something has to be done so I think some kind of government you know takeover will be approved eventually but I'm glad that there's hesitation there has to be something for homeowners and and the public that that are really the ones been getting most hurt by this and this this deal just wasn't wasn't it I have four Sons six grandchildren and it looks like what we're doing is we're borrowing this money and we're going to put it on the backs of our children and grandchildren to pay for it instead of taking care of big business now we have learned we need to take care of small business that's where the American economy is that's where we are going to make this country grow most people think that that shock yesterday being down 700 points and a trillion dollars in loss is going to force Congress to act that next time they will get a plan together they will pass it and we'll move on from here let's bring in our guests at this point in Connecticut the president of europacific capital and an Author Peter Schiff in London David Buick a partner with the brokerage firm BGC partners and rounding out our team in New York is an Le financial analyst and expert also on Asian markets my thanks to all of you for joining us on Inside Story and I really want to keep this show about the people as much as we possibly can the type of people we just saw in those small Snippets who to be honest some of them actually thought they sounded like they were experts they knew what they wanted they wanted intervention Peter Schiff in Connecticut do you think those people the people of America who have been watching this on their television screens and in their newspapers for the last couple of weeks are they properly informed on how this situation is going down no they've been not at all you know they've been LED down the Primrose path by the government by Wall Street you know our entire phony economy is collapsing around us and there's no way the government can prop it up the only thing they can do is make it worse and that's exactly what these bailouts are going to do you know America's days of borrowing money to consume are over we're broke we've blown our money we don't have any savings what savings we had we squandered on consumption and on bad more real estate loans you know we can't borrow money to buy cars anymore we can't borrow money to buy houses we can't borrow money to do anything we've got to start saving and producing and unfortunately the world's a problem the problems for people in other countries are not a function of our economy collapsing but of the cost of trying to continuously prop it up see we've been screwing up the global economy because we've been consuming and borrowing too much and and instead of saving and producing and this is what's changing so pet shift there're saying it's not really up to the government David Buick over in London people I guess instinctively look for options in a time of Crisis like this and especially when the main option it seems to cost $700 billion my question to you is was there ever any other option though in my experience uh and in opinion U no I mean it is very difficult to hard with the actual statement of fact that Peter and Connecticut's made that is a fact but you can't just shrug your shoulders and say well that's it we're broke we haven't got any money there's no money on deposit and that's it because we have a dynasty that all of us want to protect going forward and we have to try and find a solution now this $700 billion um facility offered by Hank pulson it's not going to be the answer to all the problems absolutely not and it's going to take probably a couple of years before we even sort out the wood from the chaff and again question of any sorry to interrupt you again do you believe to go back to the people again do they understand that I don't think they fully understand what they don't think they really understand is that the banks are the archery to the fabric of society and without the banks you have Anarchy because basically you can't borrow money for anything whether it's industry or Commerce whether it's for retail and that leads to unemployment that leads to depression and that leads to Anarchy and we just can't that is an unacceptable situation by any standards on Wednesday afternoon we had the worst piece of news I think regardless of anything as a single thing was that GE has having problem raising money his credit default swap spread shot through the roof the shares Dro by 7% before money market even open you're talking about a company that was almost the largest company in the world not that long ago and nobody can't say that it hasn't got a decent business model but the fact is the banks now are moribond they are not prepared to lend money to each other the liquidity between them is not there without actually be able to create credit facilities on the back of fresh balance sheet sheets which have seen the toxic debt tipped into another bank and that toxic debt is not necessarily worth zero I'm not going to stand here and say it's worth billions and two or three years time but there's every chance that will have some intrinsic value so David the world is David Buick there telling us about toxic debt about GE one of the biggest companies in the world it's it's unfortunately it's all just bad news an Lee over there in New York are people perhaps and I think in New York you might be well placed to tell us this are they perhaps suffering from a bit of uh shall I call it Financial fever they're kind of bombarded with bad news and it's on the television the newspaper right behind you the NASDAQ is there all the tickers zipping around the building telling people about how bad the news is are they being bombarded with too much to deal with I'm not sure they're bombarded with too much especially if you're talking about people on Wall Street because that's no I'm talking about everyday people who out there walking in Times Square um possibly I don't talk to everyone out there I'm not out there interviewing them but I would suspect that a lot of people are confused because this is the first time they're hearing a lot of this news before and it's really the fault of the media for not bringing you know these issues to the four much earlier because these problems were developing years ago and it's it's a crying shame that the cnns of the world or you know any number of these large media companies have not uh explained this to Everyday citizens and now they're finally hearing about it for the first time and uh scratching their head and not understand understanding what's going on I'd like to get Peter schiff's view on this especially as an author a man who who brings these thing out to the people do you agree with what an Lee was saying there that really this has been going on for so long and people weren't told about it early enough well sure well that's why my book was called crash proof how to profit from the coming economic collapse this collapse has been building for a long time but you know as bad as it's going to be uh the government has to level with the public that there's nothing they can do to help we have to let the free market function you know you can't have borrowing without savings and we don't have any savings and you can't replace legitimate savings with a printing press if the government goes down this path and it looks like we are we're going to create a much bigger price crisis because we're going to destroy the value of our currency and then we're going to have hyperinflation we're going to have consumer prices and interest rates going through the roof and that's going to be a much bigger crisis and there's going to be absolutely nothing the government can do about it other than turn us into the next Zimbabwe and Lee back to you in New York sorry do a bit of jumping around here but I've got a lot of ground I want to cover I also you're an expert on on Asian markets as well and I'm interested to start to get more of a Global Perspective we focused a lot on the United States obviously how has reaction been for example in Asia to the idea of this government bailout and the knock on effect in Asia well I think that they're all watching intently certainly the leadership in China for instance does not want a full economic collapse in the United States because they hold so much of our treasuries they would be hurt just as badly because their reserves would go down and value as well so they're very anxious and hoping that a you know a a resolution that makes sense gets passed um however I'm not sure that what's on the table makes sense um but back to the other comment about total Anarchy I don't think that there would be total Anarchy let me just give you some perspective because in China their banking system uh nor had served a lot of the big state-owned Enterprises before and so for a long time up to about 50% of all the lending was actually a black market lending so a lot of the small entrepreneurs who couldn't get loans from the big state-owned Banks actually went underground to informal networks borrowing from friends family from other companies and so people are ingenious are entrepreneurial if there's a will there's a way and so if our banking system collapsed so to speak there are plenty of entrepreneurs who will fill in to fill in that need and there already are because if you go online there are many peer-to peer lending sites like aa.com or finance.com and it's already a multi-billion dollar industry in just a matter of a couple years and so uh I fail to buy into that uh apocalyptic scenario quick word from David Buick in London before we uh head to the break I just want to as I asked Dan about more globalp oh yeah go ahead go ahead let me let let me answer the first question on the Anarchy thing with the greatest respect China has only been in what I call the modern world for 10 years they are significantly more disciplined as a race than perhaps anywhere else in the world in the world of capitalism there's a much more strong feeling of freedom of expression and to answer Peter's question in in Connecticut uh does he not feel I mean I hear him and he he's making so much sense but I'm down to really pragmatism and I'm just hoping that with the introduction of this legislation that we will actually see much stronger regulation which will hopefully stop any repetition of what we've currently seen developed during the course of the last decade and that is what we are going to be looking at in the second half of this program stay with me please folks when we come back we're going to look at a temporary patch is it a temporary patch is it a permanent Remedy or are there other solutions to be explored that's what we want to have a look at more from our team of experts in just a few moments time
Inside Story - Bailout vote - 01 Oct 08 - Part 2
Al Jazeera English
Transcript
welcome back in this half of the show we're going to look at Solutions Beyond a bailout because it's all well and good as Barack Obama said to put the fire out and then figure out what caused it but the real key is going to be stopping that fire from igniting again still with us our guests in Connecticut Peter Schiff in London David Buick and in New York an Lee back to Connecticut and Peter shff there's there's kind of two groups I want to hold to account if you like in this half of the show the banks themselves and again looking at at a real consumer level the banks and then the consumers themselves let's look at the banks first do they need to be really pulled into line over their practices if you like and I'm talking about again consumer level the way they practice the way they lend their money their credit cards well that's all going to stop I mean the free market is going to function you know that we're not in this mess because of a lack of Regulation the government did this it was it was the Federal Reserve that kept interest rates much too low it was our tax code that encourages more borrowing it was the moral hazards of Freddy and Fanny that allowed trillions of dollars of mortgages to be insured this is a creation of government and the free market can sort this out it's not going to sort it out in a way that's going to be painless and the politicians don't like it but we can't try to prevent it you know the government can't bail anybody out the government is broke who's going to bail out the government and you know we're looking for the rest of the world to loan US money your other guest mentioned China and the fact that they have to keep loaning to us no they don't I mean we owe the Chinese a lot of money but we're never going to pay that money back and the more money the Chinese lend us the more money they're going to lose what they have to do is cut us off and the flip side for China sure when they cut us off and let the dollar collapse they're going to lose a lot of money on their US dollar Investments fine but what's going to happen to the value of the R&B it's going to go through the roof I think the Chinese currency could increase fivefold maybe more and that's going to create huge domestic demand in China it's going to lift the value of wages and savings of every person who lives in China and they're going to see a boom in their economy as their standard of living Rises and instead of producing goods and shipping them to America produce goods and consume them themselves good points you make there but if I can I'm just trying to bring this back again to the idea of looking at the banks I really want to try to help viewers to to understand the situation that they're in again the banks themselves who lend to a lot of banks are going to fail they made bad loans exactly but what about it's got to fail the government can't stop it okay then I want to go to David uh Buick in London if I can just to again continue this thread the banks there I'm going to talk from personal experience if I can a little anecdote when I moved to London some years ago and I saw so much lending it was so easy to get a credit card credit was easily available and people were pretty much living outside their means is there got to be some responsibility taken there from the banks well we've had a real it check I can assure you in the last three or four months um it's virtually impossible now to get increased credit on credit cards and I I have no issue with that it's no not possible to get a mortgage unless you've going to put down 25% of the value of the house and very few people are in a position to do that unless they're trading up and that of course in the last 6 months or so has proved very difficult and if not n and impossible to actually do and the controls uh and the discrimination against debt is significant more stringent but I'm keep harping back to the old problem is that until such time as the liquidity personally speaking in the next six months even though I'm close to retirement I don't care about the equity Market it goes down the pan I don't care about the bond market I don't care about the Foreign Exchange Market I care about life and I care about people and what I'm saying is that without banks being relatively solid and in a position to be able to give us the facilities that we need to to live we've got absolutely nothing now my point is against Peters is I hear him I understand cap can I can I just finish this very quickly is we have to have a vehicle to tip this toxic waste in I think that toxic waste has value in two to 5 years bricks and mortar don't suddenly become worth nothing in the free market well it's okay but I'm trying to find a pragmatic solution I mean there are many as as I understand theit States America hang on 80% of the people agree with you Peter I'm just saying there are other countries around the world that have got a say in this and they want to get themselves out of this Jam quickly pet sh stop lending US money that's the best way out of it you know the if the world wants to solve its problem stop lending Americans money we're never going to pay it back we're exporting inflation all around the world we're responsible for Global monetary policy uh that is creating all this inflation that there's no solution that involves propping up the US economy that is the problem now you're talking about the housing market the solution to the housing market is lower home prices people can't afford to buy these homes that's the problem if prices collapse then people can come up with a down payment but the government is trying to interfere with the market solution because it doesn't like it the government wants to maintain artificially high home prices and that leads to disaster now as I mentioned earlier there was another group which I felt maybe perhaps needed to be held to account slightly and that is the consumer themselves Peter shift over there in conne Connecticut is this the crisis which is going to make people actually sit up and realize they've been living beyond their means they've been living on credit and it quite simply has to stop now well absolutely you know the problem is we never should have had Consumer Credit in the first place you shouldn't borrow money to consume because when you do that you have no mechanism for paying back the money borrowing should be reserved for businesses who are making Capital Investments because then when you buy a piece of equipment you produce a factory you can generate a revenue stream to retire the debt and so the Consumer Credit in this country is coming to an end you know the solution uh to high home prices for example is to allow home prices to collapse then people won't have to borrow as much money to buy them but you know the government doesn't like the market solution you know your other guest mentioned that we need a mechanism for correcting these imbalances we have a mechanism it's called the free market it's called capitalism it works but you know there's going to be some pain but just because medicine doesn't taste good doesn't mean we shouldn't swallow it see unfortunately the public wants to believe that the government can save us that there's something the government can do to ease the pain there's nothing they can do you know that's how we got into the Great Depression the government constantly tried to interfere with the free market and they created that that that crisis they're going to do something worse this time because if they try to replace all the savings with a printing press they're going to destroy our our economy because they're going to destroy our money and we're going to have a much greater crisis if that happens so we need to level with the American public let them know that what we're seeing now is just the natural consequences of all the extravagances of the past and we've been led to this by our government which encouraged us to borrow and consume every step of the way every time we whipped out our credit cards and bought another imported product that we couldn't afford our phony GDP numbers went up and we said this was great okay let me ask we sewing the seeds of our own destruction let me ask and Lee in New York for her perspective you are of course in there in New York but also an expert on Asian markets I'm interested to know what consumer habits are in other parts of the world Peter shift has told us all about this extravagance and this excess what's it like for example in parts of Asia is there that Reliance on credits and Loans well I'll use China as an example sure uh the consumers there save at least 30% of what they earn and they do this because they don't have the same kind of safety units that we have in the United States so as a result they have the ility to be making a lot of purchases the the credit card industry has been trying to break into the Chinese market for some time now and have been unsuccessful because the Chinese mentality is to only spend what you can pay for and it's a very different culture and that's something that maybe the Americans need to learn but I want to make two other points in response to what your other uh uh guests have said um regarding what the government can do I agree with most of what Peter had said about letting things go to their natural level because asset prices had been in uh tremendously inflated and to prop that up is uh very irresponsible of the government however I think what the government can do to help this economy is to funnel those resources instead of bailing out Rich investors and bankers who are reckless in creating this credit mess in the first place to put that money into uh investment programs such as investing in science and technology and developing new products something that will the world will need which is you know technology to eliminate pollution you know Green Technology maybe techn uh biotechnology to help produce more food in a safe way I mean these are real things real products this is where America can add value because we have a lot of brilliant people in this country and we need to harness that Talent Miss Le bring those you I'm I'm so sorry because we are really running short on time I just want to get a final word from David Buick just because anley said something which really struck me the words she said there is a culture there in China of spending what you can pay for and that is in many ways the Crux of this whole problem do you think that mentality in places like Britain in the US it can change and that people can get onto this idea of only spending what they have I think it's loable I'm hugely en envious of it take 10 years very quickly on Peter's point the toy is broken what he said I agree again with about 75% with what he said we've lived you know beyond our means we borrowed far too much but I'm older than God and I had a mortgage for 25 years and I paid an average of 12% during that period I paid it off I haven't saved any money but I've paid it off and we need to get back to that mentality and concentrate the bank's efforts on lending money to Industry and commerce all I'm saying is the toy is broken I want it mended great points from all of our guests here today on Inside Story Peter Schiff in Connecticut David Buick in London and Ann Lee in New York thanks so much for your time and thank you our viewer for joining us here on this edition of Inside Story your comments your suggestions send them to us insid story at al.net from the whole team goodbye for now
Bailout Passes Senate, House Foes Soften
Associated Press
Transcript
the yeas are 74 and the nays are 25. it was a strong bipartisan vote in the senate giving the government 700 billion dollars to buy back so-called toxic mortgages from ailing financial institutions with the economy on edge lawmakers argued the bill is desperately needed failure to act could unleash the lightning bolts of recession and the downpour of unemployment to try to get it through the house where it suffered a dramatic defeat earlier this week senators added some sweeteners including a hundred billion dollars in tax breaks for business and the middle class and they more than doubled the federal insurance on bank deposits from a hundred thousand dollars to 250 thousand dollars the vote brought presidential candidates john mccain and barack obama back from the campaign trail to support the package this is what we need to do right now to prevent the possibility of a crisis turning into a catastrophe but some senate republicans balked at the measure we need to stabilize the market and increase liquidity not replace the market with unprecedented government intervention at taxpayer risk and expense president bush issued a statement applauding the senate vote and said with the improvements made by the senate it should pass the house that the american people expect that and the economy demands that some democratic leaders warn that adding the tax cuts to win over the dozen or so republicans needed to pass the rescue package could be counterproductive and that's because conservative house democrats strenuously oppose those breaks unless they're offset by spending cuts or tax hikes elsewhere and how they vote could determine the fate of the rescue package jerry bodelander the associated press capitol hill
Bush: 'People Are Watching' House Vote
Associated Press
Transcript
I know there's a lot of discussions uh in the newspapers and on TV about the credit freeze well let me tell you what this means it means that if you're running a small company and you need to make uh payroll or you need to make sure you got inventory to be able to sell a product or you want to expand so you can hire somebody you need to have credit you need to be able to have money on a regular basis from your local banker and the problem is because the the people are worried about the future they're worried the government won't act credit is frozen people aren't lending money from bank to bank or they're not lending money to to our medium and small-sized businesses and that means people's jobs are in Jeopardy and the bill that's before the House of Representatives tomorrow is a bill that has got the best chance of providing liquidity providing credit providing money so small businesses and medium-sized businesses can function a lot of people are watching the House of Representatives now to determine whether or not they uh will be able to act positively on a bill that has been uh improved people say what do you mean by that well the insurance for the FDIC go goes up to $250,000 that's an improvement to the legislation not only for um Banks but for credit unions as well and so I'm I'm talking to people who are you know who come from the Heartland that understand what's taking place in our economy today people understand that the House of Representatives needs to pass this piece of legislation
GOP: Bailout 'Pleasant Extraordinary Experience'
Associated Press
Transcript
the Senate came together tonight in a bipartisan fashion to address one of the most critical economic challenges this country has ever faced and we've set a clear message to America to All America that we will not let this economy fail this is not a perfect bill by any means we all know that but it's much improved from what we got originally and it's been improved because we have worked together this is not a democ atic bill it's not a Republican bill it's our bill uh this has been uh the Senate at its finest in the years that I've been here I can't recall a single time where in this close proximity to an election both sides have risen above the temptation to engage in partisan um game playing if you will uh to address an issue of magnitude great magnit it was a pleasant and extraordinary experience to participate in this effort to address a crisis which the American people are about or were about to confront and which we hopefully have alleviated to a significant degree it came about because the institution of the Senate stepped up in a mature and responsible way under the leadership of Senator Reed and Senator McConnell and said we are not going to allow partisanship you're not going to allow differences which are real and substantive to divide Us in this effort to pull together and come up with a solution to a problem which we all recognize is critical and which if it isn't addressed will lead to severe disruption of the lives of all Americans especially those on Main Street
House Debates Revised Bailout Bill
Associated Press
Transcript
on the morning after the Senate's overwhelming approval of the bailout Bill protests here on Capitol Hill this as house leaders do everything they can to try to win the dozen or so votes they'll need to win house approval of the measure there are two Provisions that the Senate added which could make a big difference the first more than hundred billion doll worth of tax cuts and the second a more than doubling of the Federal Deposit Insurance program now some lawmakers who voted against the program the first time around have now indic at they are leaning toward supporting it however Democratic leaders are concerned that the tax cuts that are in the Bill might actually cost them the votes of some conservative Democrats known as blue dogs who normally oppose such a provision without some offsets however at last check they appear willing to go along with the tax cuts because of the dire economic situation the country is in President Bush meanwhile is weighing in saying the Senate bill is exactly what the house needs to pass he calls it especially important for all Americans saying it's essential to their economic future a lot of people are watching the House of Representatives now to determine whether or not they uh will be able to act positively on a bill that has been uh improved but after Monday's stunning defeat the house leadership is making sure they have the votes needed to pass the measure before they even bring it up for consideration Jerry bodlander the Associated Press Capitol Hill
Money Minute: Mortgages, Lehman, Dreamworks
Associated Press
Transcript
P Money Mak mortgage rates have risen for a second straight week mortgage company Freddy Mack reports that 30-year fixed rate mortgages average 6.1% this week that's the highest level in about a month rates on 15-year fixed rate mortgages popular with people who are refinancing edged up slightly to 5.78% Leman Brothers has asked a bankruptcy judge to approve the sale of Energy Partners a natural gas and electricity supplier that it bought last year EDF trading a unit of one of the biggest electricity businesses in Europe has offered $230 million to the company Eagle owes lean about $664 million if the sale is approved Leman would forgive the outstanding debt under the loan Dreamworks Animation has announced plans for a sequel to Kung Fu Panda movie like all Dreamworks Animation film starting in 2009 will be produced with 3D technology Kung Fu pandas brought in more than 600 million worldwide since its release in early June making a DreamWorks animation's most successful original film ever I'm Mark Hamrick with ap money minute
Senate Approves $700B Financial Industry Bailout
Associated Press
Transcript
M Mr wicker no Mr wicker no Mr weiden no Mr weiden no Mr Biden I Mr Biden I are there any Senators present who haven't voted or who would like to change their vote if not on this vote the Y's are 74 and the Nays are 25 pursuant to the previous order the amendment having attained 60 votes in the affirmative the amendment is agreed to the the the majority leader Mr President could we have order um Mr President if Senate will come to order we'll see Friday uh we'll see what the house does they're coming back into session tomorrow so we're going to have to be in session until a decision is made uh when the house is going to take up the legislation
Stocks Decline on Unemployment, Factory Reports
Associated Press
Transcript
well I I I think that it's fairly clear we are close if not already in a recession it wasn't the $700 billion bailout plan that drove markets Thursday it was unsettling economic data this package has been such a story over the last few weeks that we really have not had a chance to talk about or focus on the actual economic data that's been coming out and it has not been very good according to labor department reports new claims for unemployment unexpectedly Rose to 49 7,000 the highest number since the September 11th attacks investors will get an even broader employment report tomorrow we've already had eight consecutive declines in payroll employment and we think we're going to see a ninth one tomorrow morning right now we're looking for about 100,000 job loss but a lot of uncertainty surrounding it especially given how weak the uh unemployment claims data has been recently the troubling news sent stocks into negative territory throughout the day the Dow Jones Industrial Average closed down 3 48 points at 10,482 the S&P 500 closed down 46 at 1,114 and the NASDAQ closed down 92 at 1,976 the house is scheduled to vote on the bailout Bill sometime Friday along with that the unemployment numbers will be coming out first thing tomorrow morning so there will be plenty of news for investors to digest before the trading day is out in New York Bonnie go the Associated Press
Wall Street Sees Senate Vote As Positive Sign
Associated Press
Transcript
[Music] a he c here on wall the00 billion ba the floor withing colors a 74 25 ve overwhelming show support now of coursetially it was not able to pass the house and it had devastating consequences here on wall street we saw the biggest single day point drop ever and investors have been watching wely to a together resc economy they see the op at this point to resc economy out finanal cr this is not theep some the inv maret care yesterday we now the day invk
House To Vote On Revised Bill
CBS
Transcript
with the stock market losing another 348 points and with credit at a standstill the House of Representatives faces a decision of a lifetime pass or don't pass the Senate's huge new bailout Bill the president today emphatically demanded action people understand that the House of Representatives needs to pass this piece of legislation basically the Senate took the $700 billion package that failed Monday increased FDIC deposit protection up to $250,000 but then added almost every popular tax break circulating on Capitol Hill adjusting the AMT the Alternative Minimum Tax to keep 25 million people from paying higher taxes next year tax credits for the wind and solar Industries to create new jobs in dozens of States some of the tax breaks are aimed directly at winning new votes extra funding for Rural school districts for example is highly popular in the Far West where 51 house members voted no and a $11,000 tax credit allowing families to offset property taxes is being pitched to liberals as tax relief for the middle class the biggest problem and it's huge is that the cost approaches $110 billion in new deficit spending we'll get this done on behalf of the American people uh and I'm very optimistic we'll get it done in a bipartisan way Democrats still say they have all of their yes votes from Monday so The Showdown question is how many fiscal conservatives Democrats and Republicans might hold their nose on deficit spending and change their no votes to yes Zack wamp changed his mind after going home to Tennessee a lot of moms and dads are looking at me saying I appreciate you voting no and standing up for us but don't let this go on very long because we're really worried about our accounts Michigan Republican Pete hookstra a no vote on Monday is now leaning yes it may be better voting this bill in than going home and doing nothing and risking the consequences and here's how we will all know by tomorrow if this bill has any chance house leaders say they won't even bring this package up for a vote unless this time they know it's going to pass Katie all right Wyatt Andrews to be continued Wyatt thank you
Senate Votes Aye On Bailout
CBS
Transcript
after the surprise failure of the original bill in the house the reworked version went first to the friendlier Senate and that of course meant that all of the focus was on the two presidential candidates as John McCain's plane was Landing Barack Obama addressed his colleagues on the senate floor to Democrats and Republicans who've opposed this plan I say step up to the plate McCain spoke earlier in the day in Missouri if we fail to act the gears of our economy will grind to a halt Mr Bennett Mr Biden in the roll call vote mcain Obama and Democratic vice presidential candidate Joe Biden cast three of the 74 eyes 14 more than the 60 votes the bill needed to pass the Senate version of the $700 billion Bill calls for a boost in federal Insurance on bank accounts from $ 100 to $250,000 and it extends some Cor seate and individual tax breaks but it is still not certain that those changes will survive in the house which is expected to vote on Friday so it's way too early to pop the champagne all of the members of the House still face voters in 5 weeks and a lot of them are still opposed because they are hearing from these voters that they still believe that the bill bails out Wall Street rather then restarts the economy so it's still an uphill battle Maggie [Music]
Senate Passes Revised Bailout Plan
VOA News
Transcript
Determined not to repeat the panic selling on Wall Street that followed the House vote on Monday, US senators spent much of the day drumming up support for the amended rescue plan. Senate Majority Leader Harry Reid joined Minority Leader Mitch McConnell and urged lawmakers to set aside their differences. We're in the process of setting that aside, rising to the challenge, both Democrats and Republicans, and doing what's right for the American people. So, I'm hopeful that tonight we'll see a strong vote in support of this plan. That bipartisan shown here in the Senate today will spark the House of Representatives to do the same. On this vote, the yays are 74 and the nays are 25. Late Wednesday, senators voted 74 to 25 in favor of the plan. The House of Representatives is expected to vote on the revised bill on Friday. Many in Congress remain opposed to the idea of using taxpayer money to buy up bad debt from troubled financial institutions. But President Bush said the improved plan offers more help for the middle class. It's very important for members to take this uh bill very seriously. It's important to get credit flowing again so that uh small businesses and our communities will be able to finance their operations so that local municipalities will they be able to get the money they need to take care of the needs of local citizens so that states will be able to meet their needs. The revised package adds $100 billion in tax breaks for individuals and businesses. It also raises the limit on government insurance for bank deposits from 100,000 to $250,000. While critics argue the rescue package is flawed, presidential candidates Barack Obama, a Democrat, and Republican John McCain took time off from their campaigns to vote for the bailout. If the financial rescue bill fails in Congress yet again, the present crisis will turn into a disaster. If we fail to act, the gears of our economy will grind to a halt. But while there's plenty of blame to go around and many in Washington and Wall Street who deserve it, all of us, all of us have a responsibility to solve this crisis because it affects the financial well-being of every single American. The failed House vote on Monday triggered a trillion dollar selloff on Wall Street. Markets recovered most of the losses on Tuesday when it became clear that Congress was prepared to amend the rescue plan. Millar Sega VA News.
Tight Credit Hurts Small Business
VOA News
Transcript
all across America small businesses are facing a credit crunch in Houston Texas gift shop owner Linda Heckman has turned to credit cards to keep her business operating because credit from the bank is hard to get I use my credit cards in order to buy merchandise for the store and pay it back so um on 30 days so you know if I'm doing that then if I can't do that then I can't buy merchandise in Arlington Texas Roger bti used to be able to get a seven fig loan within days for his printing business not anymore he says now I go to the same bank it takes some not weeks but months to put a package together by this time uh I may lose the project Al together business owners need credit to finance their operations but experts say Banks and other financial institutions are so worried about bad debt in the markets that they're afraid to lend money money even to Reliable borrowers and when businesses are able to borrow they worry about whether their customers can afford to buy their products in Dearborn Michigan car dealer Jay stur says this is the worst business environment in almost 20 years some of the bank stts has worked with have stopped extending credit to his customers those Banks kind of come in and um you know we've had some good relationships with them um but they've definitely pulled back um in the last I would just you know the last 3 or four months the US Commerce Department says small businesses employ about half of America's private sector workers Financial experts say if credit markets tighten further small businesses could start laying off employees some of that has already happened in Los Angeles says small business owner langang langang he says many of the stores in his building have gone out of business before a lot of people coming but right now you see no people people come and that could drive up unemployment and possibly send the economy into a prolonged recession Alice rivlin was the first director of the Congressional budget office she's now with the Brookings institution in Washington there's great uncertainty at the moment about the future course of the economy the one thing we do know is if we don't restore credit uh to its normal flow we will have a much worse situation than we would have otherwise the bailout plan from Washington is designed to restore confidence in the financial markets and free up credit but small businesses believe their troubles are not likely to end anytime soon Lea Hong Fincher vaa news
Will ECB cut interest rates?
CNN
Transcript
The ECB definitely changed its tone today and quite significantly so. Despite inflation being way above where it should be, the ECB signalled it might cut rates soon. We do expect a rate cut in December. And would you expect the Bank of England, while we're talking about interest rate cuts soon, would you expect the Bank of England to cut soon? Well, the Bank of England has been thinking about a rate cut for a while. The economic situation in Britain has become significantly worse. We think that the Bank of England will cut rates next week and will then continue to shave rates until it has gone all the way from 5% now to 3.5% by the middle of next year. Well, let's get back to the ECB and Jean-Claude Trichet. He seemed to be pouring a lot of cold water on the idea of a European bailout plan. Nobody's actually bought it. Nobody's actually proposed a European bailout plan, but it seems to be a large kite that's been flown above Paris. What do you think of what Mr. Trichet was saying about that idea? Well, I think Mr. Trichet's comments were rather factual. He has basically pointed out that, of course, the European Union is not a United States of Europe. It's not like the United States of America with one big federal budget. So there is no common authority in the eurozone. And so, I think that the European Union is a very good example of that. And I think that the European Union is a very good example of that. Well, on this side of the Atlantic, of course, the discussion is not so much about all the details of the plan. The perception is clearly that we need something significant out of the US soon. And the perception here is that the plan will probably pass in some form or the other. And that likely there will be a relief in markets over here once that has happened.