The global wait begins for an expected tight vote on the $US700 billion rescue package in the US House of Representatives after the Senate today passed the bailout plan designed to calm panicky bourses.
The global wait begins for an expected tight vote on the $US700 billion rescue package in the US House of Representatives after the Senate today passed the bailout plan designed to calm panicky bourses.
The house is due to vote on an amended bailout plan on Saturday morning, Perth time, after sensationally rejecting the bill on Monday that sent world markets into a freefall, including Australia.
Prime Minister Kevin Rudd said whatever the final outcome of the rescue package, the Australian government would work to ensure the stability of the domestic economy.
"We do not know the final detail of the passage of that proposal to the United States Congress, we don't know its long-term impact," Mr Rudd told reporters in Perth.
"Therefore the prudent course of action is to be looking ahead three, six, nine, 12 months time and to ensure we are responding intelligently and appropriately to the advice of the (Australian financial) regulators.
"My responsibility is to do everything sensible to maintain the stability of the Australian financial system, and I intend to so."
Markets in Australia, Hong Kong, South Korea, Singapore, Taiwan and Japan - down 1.88 per cent to a three-year low - were today all in negative territory as broader concerns about a global economic slowdown outweighed relief over the amended rescue package.
Markets in China, Malaysia and Indonesia were closed due to national holidays.
The Australian Stock Exchange dipped slightly, down 0.7 per cent, after recovering yesterday almost all of the previous day's $51 billion wipeout.
One effect of this week's market meltdown has been to make an interest rate cut of up to half a percentage point more likely at the Reserve Bank board's monthly meeting on Tuesday.
The opposition has accused the government of going soft on the retail banks after Mr Rudd and his Treasurer Wayne Swan said they would only pressure the major banks to pass on the maximum amount that was economically responsible - not necessarily the full cut.
"The overriding concern we all have is to maintain the stability of the Australian financial system," Mr Rudd said today.
"That's what I'll do even if it is not politically popular."
ANZ's chief of Australian operations Brian Hartzer said the Australian economy was in good shape, but "unbelievable fear" in offshore markets about credit had made it difficult for the bank to source short-term funding.
If the difficulties continued, it would flow on to credit lending in Australia, he said.
The US Senate's 74-25 vote to back the Bush administration's amended bailout plan spurred hopes of a change of mind by the House, whose rejection of an earlier bid this week sparked America's first ever trillion-dollar one-day market loss.
The deal would give the US Treasury power to buy bad assets from banks and other financial firms at a steep discount, hopefully recouping the money by selling the assets later once financial stability returns.
"The American people expect and our economy demands that the House pass this good bill this week and send it to my desk," said President George W Bush.
