The FT reports* on the continuing sale of financial firms’ securities:
A recent ban on short selling failed to halt the sell-off in the financial services sector in London on Tuesday as doubts about the effectiveness of a proposed $700bn US government rescue plan grew.
Details of the plans for the $700bn fund to buy distressed assets from banks remained unclear after further negotiations in Washington on Monday, leaving investors afraid the final package would be watered down.
Meanwhile, the Ludwig von Mises Institute asks, “Can the Rescue Plan Fix the US Economy?”:
But why should pumping more money do the trick? It seems that, for most experts, money is an agent for economic growth. Money however is just a medium of exchange and cannot create real wealth as such. On the contrary, monetary expansion results in the squandering of real wealth and economic impoverishment (look at Zimbabwe). If the pool of real savings is declining, then real economic growth will follow suit regardless of how much money the Fed is going to pump.
Both are recommended reading:
* The FT updated their article slightly as the UK responded to initial US trading.