US Senate vote unconvincing for Asian markets
Despite Senate approval the US financial rescue plan faces hurdles in the lower house which rejected a first version of the proposal last Monday.
The plan was slightly changed with the addition of tax breaks for the middle class and small and medium size business as well as a provision to increase bank deposit insurance to US0,000 from US0,000.
The core of the plan—which would see the government buy toxic debt from financial institutions to get banks lending again—is unchanged.
Public opinion in the United States remains hostile to a proposal that would save Wall Street and have US taxpayers foot the bill. What is more for hundreds of economists the plan is only a short-term solution, useless to tackled the financial bubble.
“There is little room for optimism. Even if the bill is passed, worries remain over the global economic outlook so financial markets are unlikely to stabilise,” said Masamichi Adachi, a senior economist at JPMorgan Securities in Japan.
“It's a completely different world now. All the things US authorities are doing now are simply aimed at preventing a global meltdown. They might trigger a short rally in markets but won't offer a fundamental solution,” he said.