Financial Rescue bill FAILS. Market has RECORD fall. CREDIT FROZEN!

Update: Btw, Wachovia (4th largest bank in the US) has been bought by Citibank. Now, technically it is not a “failure” – but in reality… it obviously is! The deal is: Citi paid $2.2 Bn for – Citi will assume up to 42 billion dollars of losses from a pool of 312 billion dollars of loans held by Wachovia; the FDIC will absorb losses beyond that and take a stake in Citigroup for the guarantee.

The Financial deal has failed to pass through the House!  228 to 205…

The Republicans say that they were hurt by a para in Nancy Pelosi’s speech and so they did not vote for the “Yes” on the deal.  What has this precipitated?

Well, for starters – the market has had the HIGHEST points drop in HISTORY of the US!  For perspective – after 9-11, the point drop was 722.  And I just watched the points drop OVER 734!

Also, and this is the MOST important – the CREDIT HAS FROZEN!  What does that mean?

Well, no company has all the money everyday to run their business – pay their salaries or even pay for the inventories – and on somedays a company has more.  So, what do they do?  They buy and sell instruments called “Commercial Paper”.  This is a short term (really short term) instrument that provides money at the prevailing rates to EVERY business.  And, this is why it is serious!!

You can have the BEST assets in the world – but they can remain where they are IF there is no money to move things!  THAT money, friends, has FROZEN as we speak!