Stock Market Falls

Stock markets and other financial markets took a dim view of the future today (Oct. 6, 2008) with the Dow Jones Industrial Average falling below 10,000 for the first time since 2004. Credit markets remain strained and investors are wondering if the $700 billion dollar bailout will not work quickly enough to unfreeze credit markets. The credit crunch is starting to affect the average wage earner causing a crisis of consumer confidence.

Banks made bad bets on mortgage backed securities and are saddled with these securities and remain starved for cash. Stocks have taken a beating in the US, Europe, and Asia causing investors to seek the relative security of US government debt and the rising dollar continues to provide Forex opportunities. Oil dropped to below $90 dollars a barrel due to fears of a global recession.

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Bailout Passes House

Friday the US House of Representatives passed the bailout bill by a vote of 263 to 171. The bill was immediately signed by President Bush. In a Rose Garden appearance at the White House Bush stated, “By coming together on this legislation, we have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country.” The bailout bill remains unpopular with US taxpayers and the revised version of the bill contains many earmarks unrelated to the bill’s original intent.

Bush Administration Lobbies House

The House vote followed intense lobbying by the Bush administration and supporters of the bill. The law essentially allows the US government to purchase toxic assets from troubled banks and financial institutions. The bill is designed to inject massive amounts of money to loosen all but frozen credit markets. Recent market events such as the record fall of the Dow Jones Industrial Average earlier in the week and a worse-than-expected monthly jobs number with 159,000 jobs lost in September. How all this will affect world currency markets is uncertain at this time but many investors are flocking to the dollar seeking the safety and Forex opportunity the dollar provides in times of crisis.

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Earmarks Defined

Wednesday evening, October 1^st, the US Senate passed the revised bailout bill. The bill had many earmarks added to it. For those not familiar with the term earmarks-an earmark is a totally unrelated amendment added to a bill usually added surreptitiously. Despite opposition by the public, earmarks are a long standing tradition in the US House and Senate. An earmark enables a legislator to insert a piece of legislation that that could never stand scrutiny in a public debate.

Earmark Examples

The new bailout bill is 451 pages long and contains many earmarks ranging from the amusing to the utterly ridiculous. Here are some of the more egregious earmarks;

Film and Television Productions (Sec. 502)

Wooden Arrows designed for use by children (Sec. 503)

6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)

Virgin Island and Puerto Rican Rum (Section 308)

American Samoa (Sec. 309)

Mine Rescue Teams (Sec. 310)

Domestic Production Activities in Puerto Rico (Sec. 312)

Indian Tribes (Sec. 314, 315)

Auto Racing Tracks (317)

Wool Research (Sec. 325)

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