A yes vote, but now onto the mad dog Republicans and Democrats in the House Of Representatives who caused this miserable week in the first place.

It was no longer a bailout bill, but another example of US pork barrelling, designed to get it through a Senate riven with self interest.

It remains to be seen how will it play in the lower House, tomorrow night our time (hopefully) where a majority of members willingly pushed the US and the world towards the edge of a nasty recession on Monday.

The 27% slump in US car sales in September is a big example of what lies ahead for the US and a string of other economies. Car sales fell to a level not seen since early 1981 by some estimates.

Confidence in the US manufacturing sector shrank to near recession lows, similar falls were reported in Japan, Europe and Britain. China was a touch higher, but not convincing.

US consumer spending is shrinking, industrial production is falling and tomorrow night the September jobs report will show a sharp rise in the level of unemployment.

All that and more awaits those who want this bailout bill defeated. Those in the US, Europe and in Australia who value purity and recession over compromise and survival.

Perhaps they might heed Warren Buffet, who earlier this morning invested $US3 billion in General Electric’s $US12 billion share raising to stabilise the country’s biggest industrial group.

In an interview broadcast on the PBS Network, Buffett had this to say about the current state of the US:

In my adult lifetime I don’t think I’ve ever seen people as fearful, economically, as they are now. The economy is going to be getting worse for a while.

Our stockmarket was hesitant this morning, easing, rising and ending up slightly just before midday after the US Senate vote. Traders know it was a first step, but meaningless without the House of Representatives approval of a piece of legislation that has grown to around 455 pages from 100 on Monday and just three last week.

The Congress late Friday passed its $US634 billion Omnibus spending bill that will keep the Pentagon, vast parts of the Government and the three US car companies, Ford, GM and Chrysler, alive with a series of loans totalling $US25 billion to cover the cost of new technologies.

Banks started reducing the large amounts of cash they had lodged at central banks as the end of the financial quarter passed. The banks in the eurozone had just over 102 billion euros in the overnight deposits at the ECB on Tuesday night and market sources said some of that was drained yesterday.

In Australia our banks reduced their holdings at the Reserve Bank from a record figure of just over $A11 billion to $A9.389 billion last night. The RBA only added $3.159 billion to fill a system deficit of $3.535 billion this morning.

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.

 

Peter Fray
Editor-in-chief of Crikey

JOIN NOW