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Sunday, November 11, 2012

Wiki of the day, November 11,2012: Emergency Economic Stabilization Act of 2008

To stay on track I have decided to post one Wikipedia article each day.  My goal will be to post articles on topics that I feel do not get enough discussion in the daily grind that is our media.  I should note that this is not a political blog and neither will all of these articles.  So first up:

Emergency Economic Stabilization Act of 2008

This was the "Wall Street bail-out."  I think this is interesting to research because of the quickly forgotten controversy around it when it was passed.  Let me highlight that my motivation is not partisan- instead the tremendous power corporations (in this case banks) have over the government to create unsupported and possibly bad policy.  Now you may think that I may be a borderline conspiracy nut- but keep the definition of conspiracy in mind- anything that involves some level of negotiation could is a conspiracy, and when you are just pointing out something that happened they is not a theory.. it is indeed, and is consistent with the title of this blog: an observation.

To get you started:

Many members of Congress, including the House of Representatives, did not support the plan initially, mainly conservative free-market Republicans and liberal anti-corporate Democrats. Alabama Republican Spencer Bachus has called the proposal "a gun to our head" fear-inflicting policy of the administration to stifle proper debate and affect decision.
 It should be noted how this was indeed rammed through the legislature and did not even pass in its first go.

Here is something else to think about.  .

Immediate market reactions
On September 19, 2008, when news of the bailout proposal emerged, the U.S. stock market rose by 3%. Foreign stock markets also surged, and foreign currencies corrected slightly, after having dropped earlier in the month. The value of the U.S. dollar dropped compared to other world currencies after the plan was announced. The front end oil futures contract spiked more than $25 a barrel during the day Monday September 22, ending the day up over $16. This was a record for the biggest one-day gain.
 Look how powerful a promise is.  Items that affect market speculation make things change on a dime.  The point- it is important to realize these markets operate on little substance.  When it failed to pass days earlier market-reaction was equally dramatic but negative:

Market reaction to September 29 vote
Following the House vote, the Dow Jones Industrial Average dropped over 777 points in a single day, its largest single-day point drop ever. The $1.2 trillion loss in market value received much media attention, although it still does not rank among the index's ten largest drops in percentage terms. The S & P lost 8.8%, its seventh worst day in percentage terms and its worst day since Black Monday in 1987. The NASDAQ composite also had its worst day since Black Monday, losing 9.1% in its third worst day ever.

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