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History's greatest financial fall: How it began

September 23, 2008

September 19, 2008: The US government proposed to create a $700-billion rescue fund for the American financial sector.

The fund will be used to buy back bad debt from ailing US banks and other financial institutions.

President George W Bush urged the Congress to endorse his plan as soon as possible. Congress is expected to take a decision in the coming days.

The move increased the US public debt to $11.3 trillion.

The President said: "This is a big package because it was a big problem." He argued that the drastic measures were necessary to keep the economy going. The president admitted that the plan would be funded with tax money, but added that "over time, we're going to get a lot of the money back."

Relieved investors sent stocks soaring on Wall Street and around the globe. The Dow-Jones industrials average rose 368 points after surging 410 points the day before on rumours that the federal action was afoot.

The Sensex on September 19 ended with a significant gain of 5.5% (727 points) at 14,042. The NSE Nifty soared over 5% (207 points) to 4,245.

That, till now, is the scenario. If the events that led to the world's worst-ever financial crisis are not scary enough, some economists fear that this might not be the end of the problem. So will things worsen? Only time will tell. . .

Image: US President George W. Bush (L) speaks alongside Treasury Secretary Henry Paulson (R) regarding the economy in the Rose Garden at the White House in Washington, DC | Photograph: Saul Loeb/AFP/Getty Images Images

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