Gerard Baker: Congress repeats 1930s errors with bailout vote
[Gerard Baker is US Editor at the Times.]
In the 1930s, the US Congress did more than its fair share in helping to turn a financial crisis into a global depression. Yesterday it looked as though it was auditioning to assume that role again.
Back then, Congress’s vote for protectionist legislation, the infamous Smoot-Hawley Tariff Act, which erected trade walls around America, almost brought to a halt the free movement of goods and services vital to the efficient functioning of the global economy.
Yesterday, in rejecting a plan to help to rescue the US financial system that had been constructed and reconstructed by the Bush Administration in collaboration with the Democratic and Republican leaderships, the House of Representatives dealt a hammer-blow to an already almost immobilised global financial system.
In the immediate aftermath of the vote, Washington and Wall Street were plunged into chaos. The initial House vote to reject the so-called Paulson plan was by 226 votes to 206, though the Democratic leadership scrambled to try to pull more opponents of the vote across to pass it. But as time appeared to be running out, financial markets went into a state of shock, with the Dow Jones Industrial Average plunging to 778 points. The broader S&P index recorded its largest one-day percentage fall since the crash of 1987...
Read entire article at Times (UK)
In the 1930s, the US Congress did more than its fair share in helping to turn a financial crisis into a global depression. Yesterday it looked as though it was auditioning to assume that role again.
Back then, Congress’s vote for protectionist legislation, the infamous Smoot-Hawley Tariff Act, which erected trade walls around America, almost brought to a halt the free movement of goods and services vital to the efficient functioning of the global economy.
Yesterday, in rejecting a plan to help to rescue the US financial system that had been constructed and reconstructed by the Bush Administration in collaboration with the Democratic and Republican leaderships, the House of Representatives dealt a hammer-blow to an already almost immobilised global financial system.
In the immediate aftermath of the vote, Washington and Wall Street were plunged into chaos. The initial House vote to reject the so-called Paulson plan was by 226 votes to 206, though the Democratic leadership scrambled to try to pull more opponents of the vote across to pass it. But as time appeared to be running out, financial markets went into a state of shock, with the Dow Jones Industrial Average plunging to 778 points. The broader S&P index recorded its largest one-day percentage fall since the crash of 1987...