U.S. Congress just defeated the proposed $700 Billion Bailout package in front of them, sending stock markets around the world into a tailspin. I think most people expected this to pass even though most people don’t like it, and this sets the stage for another incredibly turbulent week in the economy. It won’t be long before they come up with another version of this plan (could be later today) and ultimately get SOMETHING passed, because they have no choice but to do something. It tells you how bad it is when one of the U.S. major banks, Wachovia, collapses as it did last week, and it isn’t even the lead story! My message for the last several months has been consistent – It’s Going To Get Worse. That continues to be the case, but I am hopeful that they can get something passed – not so much because it will actually FIX anything, but it will provide some psychological confidence to the markets. Folks, we are TRULY living through one of the most incredible financial and economic situations that any of us have ever witnessed (unless you happened to also be around for the Great Depression almost 80 years ago). Expect a deal to be reached in the next day or two, and the market volativility to remain. My hope is that once a deal is reached, the financial system begins to start moving again. Unfortunately, I don’t think we’re going to see the improvement in credit markets for several months. Expect interest rates to be cut both in the U.S. and Canada in October, possibly 50 basis points, depending on how much this bailout mess continues to drag on people’s minds. The big question you DON’T see them talking about is, “Where is the U.S. going to get the money to PAY for this bailout?” I’ll address this very interesting question in my next post.]]>