US Senate approves $ 700 billion rescue plan

How much is 700 Billion? 700 Billion or in Indonesia is 700 Trilliun, has 11 zeros. A super-duper great huge money. And this fresh money will be used to rescue US economy.

The American Senate approved the 700 BN bailout plan put up by the Bush administration and the Treasury secretary, Henry Paulson. Both Paulson and George W. Bush welcomed the decision and asked the House of Representatives to follow the example as soon as possible.

"The legislation, approved last night on a 74-25 vote, authorizes the government to buy troubled assets from financial institutions rocked by record home foreclosures. It contains two provisions favored by House Republicans: One raises the limit on federal bank-deposit insurance; the other reiterates the authority of securities regulators to suspend asset-valuing rules that corporate executives blame for fueling the crisis", Bloomberg.com reads.

Both presidential nominees, Democrat Barack Obama and Republican John McCain, returned from the campaign trail to vote in favor of the plan.

Tax provisions in the new version of the plan are expected to win the necessary votes in the House of Representatives, several politicians declared for the US media and the international press agencies.

But the questions here arises Is it enough to heal the economy?. However some financial experts says that US$ 700 billion dollar is still not adequate to bring back the financial condition back to its previous state but it can help to recover from current crisis. The crisis are so deep that the company like AIG is helpless and preparing for bankruptcy which was later helped by US$ 85 billion to carry on its business. One of the major reasons why the Fed rescued AIG was to prevent a fall in the value of bank assets, a fall that would in turn expose their true net worth and cause (it is generally believed) a run on banks that would decimate the entire banking system. As long as the AIG can keep paying the banks’ losses for their suspect (but insured) investments, those banks don’t need to reappraise their true values.

It’s just a line of zeroes. It’s merely 700,000,000,000, and if you look closely and blur your eyes just right and then hit yourself in the face with a brick, you’ll soon see that each and every one of those cute little circles is filled with goodness and candy and the sweet sighs of puppies and pie. The rescue plan of 700 billion dollars still does not buy all the bad mortgages. The main concern is now how the 700 billion will be allocated.