Rescue Bill passes House Bush signs it into law

Friday 2:10 p.m. October 3, 2008

The historic rescue bailout package has just been approved by the House of Representatives 263 votes in favour to 171 against and will be signed into law by President Bush later this afternoon. In the end supporters of the bill were successful in persuading enough Democrats and Republicans who opposed the package to endorse albeit reluctantly an improved version of the bill which expands deposit insurance, cuts taxes for middle income Americans and helps rural schools, reduces foreclosures and includes several other sweetners to make the bill more attractive.But the core provisions of the Bill which strengthens oversight and regulation and   authorizes the Treasury to buy up toxic debt and remove it from the balance sheets of the banking sector until such time as at least some if not all   of it can be resold for a profit remains intact. The bill is less than perfect . But in the circumstances it is necessary and it is a good thing that it has been passed.

Unemployment is rising in the US, consumers are reluctant to spend, the banking credit system is close to paralysed. Now the work can be done to repair the damage and reverse the prevailing pessimism. It is as I have said before an historic turning point and the end of an era of excessive deregulation and anti-Keynesian thinking.

There is still trouble ahead but the Government of the US is now much better equipped to counter the challenges. The next step in this process will have to be the development of a more substantial fiscal stimulus focused on labour intensive infrastructure that is needed to supplement the existing stimulus program that the Congress passed earlier in the year. 50 billion that is currently proposed by Senator Obama is nowhere near enough.