Financial thoughts

Investors will hand down their verdicts this week on worldwide rescue plans topping 1 trillion dollars designed to end the worst financial crisis since the Great Depression.

The Bush administration asked Congress on Saturday for $700 billion to bail out firms burdened with bad mortgage debt, seeking extraordinary authority as it seeks to prevent meltdown in the global financial system.

Senior Bush administration officials pressed counterparts in Japan, Germany, Britain and other nations to set up similar plans for their own troubled financial firms

After a rollercoaster week which saw the collapse of Lehman Brothers, the bailout of insurer AIG and the firesale of Merrill Lynch and UK bank HBOS, policymakers hit back, throwing a lifeline of billions of dollars to global markets and banning short selling.

The Federal Reserve led a central bank move on Thursday to flood $180 billion into jammed up money markets and on Friday the U.S faxless cash advance. Treasury laid out $50 billion to guarantee money market mutual funds and crafted a plan to mop up toxic mortgage debt.

The market reaction on Friday was dramatic. World stocks, measured by MSCI, rallied 6.15 percent, posting their biggest one-day gain since at least 1988, while the dollar rallied more than 2 percent against the yen.

Russia, which was forced to suspend stock and bond trading for two days last week, is pledging $130 billion in emergency funds to help prop up local markets.

Under the latest U.S. plan to purge bombed-out assets from balance sheets, the U.S. government could acquire up to $700 billion in home and commercial mortgages and related assets from U.S.-headquartered banks and other institutions over the next two years. 

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