While the current market issues and the associated proposed government bailout continue to be major concerns in the United States, other countries are also feeling the effects of this financial crisis. Many countries are feeling the impact of the crisis and pending bailout in their stock markets and banking industries.
Yesterday, the Senate voted 74-25 to approve a bailout, which included amendments that raise the amount of funds that will be federally insured from $100,000.00 to $250,000.00, extended tax breaks and will restrict “"golden parachute’ severance payments to disgraced Wall Street executives.” President Bush has asked the House of Representatives to approve the bailout by the end of the week so it can be enacted “to avoid further damage to the US economy”. It is uncertain whether this vote will be taken this week, and whether the House will approve this amended bailout after previously rejecting an earlier bailout proposal.
Even with just the Senate approval of this bailout, European stock markets were lifted and the value of the dollar was raised in Europe. Although there has been some improvement due to this Senate approval, the European Central Bank has renewed millions of dollars in one-day loans to ensure that distressed interstate banks would continue to have proper cash flow. The Asian stock market continues to fall due to this American financial crisis; banks have been required to expend several billion dollars in order to ensure the Asian stock markets continue to move.
On Saturday, economic leaders from Britain, France, Germany and Italy will convene "to discuss the crisis and a Dutch proposal for a European rescue fund for banks.” Some countries have taken measures into their own hands rather than wait for a response from the European Union. Two major Dutch banks have already received government bailouts and an emergency law was passed in Ireland to guarantee bank deposits (a move several European countries fear will mean a large number of transfers from other European countries to Irish banks).
It is natural that we think of resolving our economic issues without necessarily considering the impact felt by other countries. Still, it is obvious that our economic difficulties are having a large impact outside of our borders. Hopefully, the bailouts and measures taken by both the United States and foreign countries will be sufficient to turn around this crisis and ensure measures are in place should something similar happen in the future.
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