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No sector spared as carnage hits ASX -

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LISA MILLAR: The blood-bath began when members of the US House of Representatives ignored the pleas
of the President and head of Treasury, and the recommendation of their own party leaders. Narrowly
defeating the $700-billion economic rescue plan.

Despite the backing of presidential candidates, Barack Obama and John McCain and some impassioned
debate on the floor of the House, the bill was voted down and the market tumbled.

Markets around the world followed and Australia was no exception.

The key market indicator, the All Ordinaries Index, dived 222 points or a whopping 4.6 per cent in
early trade as investors sought shelter from a financial tidal wave that is engulfing the globe.

As expected the banking sector has taken heavy losses, but the heavyweight miners who've been
benefitting from the resources boom have also dived.

As business editor Peter Ryan reports, no sector was spared from the fallout.

PETER RYAN: As soon as the bailout deal was rejected by the US House of Representatives early this
morning, futures traders were predicting a blood-bath for the Australian share market.

By the time the session fully opened, the All Ordinaries index had plunged by more than five per
cent, though not the seven per cent dealers had been expecting.

Not surprisingly, the banking sector, the one-time shelter in a storm was among the hardest hit.

SAVANTH SEBASTIAN: Yes the weakness is in financials, we've seen the likes of National Australia
Bank down about seven per cent, St. George down about 6.5. Commonwealth Bank probably doing the
best out the big four down just over four per cent.

PETER RYAN: Savanth Sebastian in an equities economist at CommSec. He watched this morning as the
financial sector took account for a third of the early losses, exacerbated by some big falls for
investment banks.

Macquarie Group was down 13 per cent while Babcock and Brown fell 29 per cent.

But banks aren't on their own in this blood-bath, with the mining heavyweights BHP Billiton and Rio
Tinto swamped by fears that on top of the bail-out rejection, the resources boom might be nearing
an end.

SAVANTH SEBASTIAN: Selling has been across the board, it's not just financial stocks that have been
hit but resources as well. You've seen the likes of BHP are down close to 10 per cent, even Rio
Tinto is down around 10 per cent. Fortescue Metals down 17 per cent at the moment and really it's
likely the weakness should continue with Asia seeing some weakness as well this morning.

PETER RYAN: In the early hours of trade, the Australian share market lost $66-billion in value as
investors ran for the doors.

Even so, Australian is engulfed in a global sell-off as investors deleverage their debt fearing the
United States could now plunge into a deep recession.

Morgan Stanley's index of the world's top 23 markets fell six per cent overnight, that's the
biggest fall in the history of the index.

London's share market fell 5.3 per cent, as the British Government deals with banking bail-outs of
its own.

Elsewhere in smaller markets, Ireland dived 13 per cent, Russia fell 5.5 per cent and the Brazil
exchange slumped 7.1 per cent.

CommSec's Savanth Sebastian says there'll be more of the same if the US Congress continues to play
hardball.

SAVANTH SEBASTIAN: If it doesn't go through it's likely that the market will have to work its way
through, work its way out and we could end up in a situation where this continues on for the next
six months, next year considering that the US will start to weaken, growth and Europe is not too
great.

We've seen that New Zealand is now in a technical recession so you could see a pretty sharp
slowdown in growth around the globe.

PETER RYAN: And the only way would be down?

SAVANTH SEBASTIAN: The only way would be down and that wouldn't be a pretty sight.

PETER RYAN: In the United States, investment strategists like Michael James of Wedbush Morgan
Securities, believes that while the bail-out plan failed today, it was never going to be a
cure-all.

MICHAEL JAMES: I think to expect that a passage of the bail-out plan was going to be like some huge
$700-billion bottle of Draino and just automatically unplug all of the pipes. I think that was a
fallacy, that wasn't going to happen. But certainly what we saw today was that by not passing the
bail-out plan investors voted with their feet and they voted to be selling stocks.

PETER RYAN: But Michael James says Jewish holiday or not, an alternative deal needs to be brokered
to avert a financial catastrophe.

MICHAEL JAMES: You've had significant obliteration seen not only in equities but also in
commodities across the board. This is a very bad sign for the market short-term, we need to see
something happening of some concrete value tomorrow morning in order to alleviate another further
significant sell-off tomorrow I think.

PETER RYAN: The concern now is that credit markets will freeze over, as banks reassess their risk.

Wall Street trader Joe Keenahan says that will hit consumers as credit rationing begins.

JOE KEENAHAN: There is so much concern because the bigger point that I don't think people have
bought up that if this is not passed eventually the banks are going to have to do something really
significant like cut credit card lines. That's when it's really going to take hold to main street
that hey we've got a problem here. People will not be able to charge anything and I think that
really is the ultimate dramatic step that it may pass before Congress finally does get the message
they have to do something immediately.

PETER RYAN: The Wall Street fallout also made an immediate impact in Asia, with share markets in
Japan, Hong Kong and Singapore down more than four per cent.

The Australian dollar is another casualty today, it's plunged two per cent in the wake of the
bail-out rejection, now well below 80 US cents.

LISA MILLAR: That's business editor Peter Ryan.