Yea 205, Nay 228

This is really unexpected. The US House representatives voted down the USD700b financial proposal amid an intense "fear and haste" environment. What is really surprising is that only 1/3 of the Republicans voted for Bush's plan while 2/3 of the Democrats voted for it.

Without doubt, the US markets and other world markets plunged like no other business due to losses of confidence in the banking system. Hey, didn't RBA warned us of a "nasty" period earlier here before? New records were created yesterday:

Egs.

* Dow Jones -778 points with USD1.2T value wiped out
* S&P500 worst tumble since Black Monday Oct 19 1987
* Oil slumped more than USD10
* Reuters/Jefferies CRB Index of 19 commodities had its biggest tumble since 1956
* VIX Index- fear index closed at its highest levels in its 28 years of history

The impact of slamming down the proposal will without doubt resulting a possibility to salvage/renegotiate/modify the bailout plan amid with different considerations. The earliest they can do this is on Thursday when the House reconvened and when it is the turn for the Senate to vote. However said, the US public does not seem to be in favour of the plan to be reconsidered again. A poll done by CNN asked whether "Should the House reconsider its rejection of the USD700b economic recovery bill?" The latest verdict : Yes 47% and No 53%. Without the bill, Treasury is in a bind. Without a comprehensive administrative tools, they will need to look at issues of institutions one by one and the rescue will take longer compared to if you have the plan.

Meanwhile the Asian markets which have initially taken the bad news violently when they tumbles more than 4% in early trade closed slightly better. Could a tweaked and modified bailout plan is in the works or markets just closed better due to window dressing for the 3rd Quarter? Irregardless, the longer the time taken to adopt a comprehensive plan will sink US and other economies deeper into recession.

* Reuters: S.Korea and Indonesia will ban shot selling of shares until the end of the year. Hong Kong authorities will monitor short selling diligently.

* Bloomberg: Dexia, world's biggest lender to local government will received USD9.2b bailout from Belgium, France and its shareholders.