WASHINGTON — World stock markets remain jittery even after the U.S. Congress approved a $700 billion financial rescue plan. In the first full day of trading after President Bush signed the bill into law, New York’s Dow Jones industrial average stock index fell more than 7 percent before rebounding slightly and closing down 3.5 percent. These movements were echoed in markets around the globe.
Speaking to an audience in Ohio on October 6, President Bush said it will take time for the rescue plan to take effect.
“I believe that this plan will work over time. I signed the bill on Friday. It’s going to take time for the Treasury Department to put a plan in place that won’t waste your money and that will achieve the objective,” he said. Bush said the rescue plan is large enough to prevent credit markets from freezing up.
The two candidates vying to replace Bush as the next U.S. president also weighed in on the market’s reaction to the rescue plan, which both supported when the bill came before the Senate.
“It was a tourniquet, but not a permanent solution,” Republican Senator John McCain told supporters in New Mexico on October 6. “Today we’re seeing the stock market fall and the credit crisis spread to other parts of the world. Our economy is still hurting. … Further action is needed. It must be done.”
McCain promised additional measures to shore up the U.S. economy, including tax cuts and reduced government spending. He vowed to balance the federal budget by the end of his first term in office if elected president.
Democratic Senator Barack Obama warned that continued turmoil in the markets could have grave consequences. “Not only are we seeing the stock market go down, but there is still a great danger of the credit markets locking up, and we’ve seen that the contagion is spreading to all parts of the globe. Europe is having some of the same problems that we’re having here in the States. Asia is being affected,” he told supporters in North Carolina on October 6.
“It is a reminder that the rescue package that was passed last week is not the end of our efforts to deal with the economy. It’s just the beginning,” he said.
Obama urged Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to move quickly in implementing the rescue plan in an effort to build confidence in the markets. He also proposed an economic stimulus package to help American consumers confront higher gasoline and food prices and to help state and local governments meet their payrolls.
Obama also voiced support for extending unemployment insurance following a disappointing jobs report showing the U.S. economy lost 159,000 jobs in September.