What’s Left for the U.S. Gov’t?

The global financial market faces its toughest week in the wake of the rejection of the U.S. bailout bill.

The financial rescue bill was considered a last-ditch measure to avoid a financial catastrophe, but was defeated in the House of Representatives Monday.

Political leaders and senior officials of the Bush administration said they understand the sense of crisis felt by the market, adding they will adjust the bill and submit it to the House again.

Given recent developments, however, it will take at least one week for the House to approve the bill.

Republican and Democratic leaders decided on further negotiations to submit a new bill, but the House will take up the bill Thursday or Friday to observe two days of Jewish holidays.

In other words, the legislation will be approved no sooner than the weekend if both parties agree.

Accordingly, global stock markets are likely to experience turbulence depending on the prospects of the bill’s fate.

Worse, ailing American and European financial institutions might not make it another week if their conditions aggravate further.

The worst-case scenario is failure of party leaders to reach an agreement on the new bill and another rejection by the House. Experts warn that the global financial market will fall into a downward spiral if this scenario becomes reality.

higgledy@donga.com