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NEW YORK - Shockwaves from the global credit crisis spread yesterday, threatening industry and jobs worldwide and putting pressure on the US Congress to approve a bailout of the US financial sector of $700 billion (about R5918 billion).
The fate of the rescue plan, passed by the Senate 74-25 on Wednesday night, now lies with the House of Representatives, which is expected to vote on the bill today.
The House rocked global markets this week by rejecting an earlier version of the bailout, which President George Bush has called "essential to the financial security of every American".
The crisis has spread well beyond US shores and beyond the financial sector. Top car manufacturers, including General Motors and Ford Motors, warned of tough times as an evaporating credit for consumers would cut demand and could force production cuts and job losses.
US figures show falling factory output, plunging car sales and rising jobless claims - a sign of increasing reluctance by banks to give loans to businesses or individuals.
Meanwhile, French President Nicolas Sarkozy's office said he would host the leaders of Britain, Italy, Germany and the European Central Bank tomorrow to discuss the crisis.
Sarkozy denied reports that a R3518 billion plan akin to the US bailout was under consideration.
Market participants remained cautious about the US bailout bill's prospects in the House, and stock index futures were down 1 percent, indicating Wall Street stocks would open lower.
"I'm not betting anything here because I don't know what the House is going to do," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Vermont. "If this bill is not passed, it's game over."
Even if the bill is passed, worries remain over the global economic outlook, said Masamichi Adachi, an economist at JPMorgan in Tokyo. - Reuters