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The Crisis Dwarfs $700B

A US-centric band aid can't quell global markets as confidence plunges

By Clay Dillow, Newser Staff

Posted Oct 7, 2008 10:18 AM CDT

(Newser) – As the financial crisis continues to grow, the $700 billion bailout passed by Congress last week may be too little too late, the Washington Post reports. The plan may not begin relieving banks of toxic assets for another month, and, meanwhile, the crisis has gone global, making $700 billion seem like a paltry amount.

In emerging markets, where financial protections are scant, panic threatens to undo years of prosperity as credit has dried up, and banks and governments face insolvency. Markets in Brazil and Russia closed yesterday to prevent a massive sell-off and China’s markets fell 5%. The growing global crisis has reached a “tipping point,” the World Bank president said, and "will trigger business failures and possibly banking emergencies.”

[Images (3)]

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A woman walks past a financial display board showing the FTSE 100-share index in central London, Monday, Oct. 6, 2008. (AP Photo/Lefteris Pitarakis)

Investors look at the share index at a private stock market gallery in Kuala Lumpur, Malaysia, Tuesday, Oct. 7, 2008. (AP Photo/Vincent Thian)

An investor trades stocks online at a private security company Monday, Oct. 6, 2008 in Shanghai, China. (AP Photo/Eugene Hoshiko)

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People are realizing that the Paulson plan is not going to be nearly enough. It looks like it's the right thing to do, but the problem is just growing astronomically.
- Martin Evans, a professor of finance and economics at Georgetown University.

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The Crisis Dwarfs $700B