The financial crisis: What happens Monday?


The conventional wisdom is that markets around the world should open higher again on Monday. Financial stocks still have to gain back all those loses from their peaks last year. If their balance sheets are going to be made whole, they should rally for days.

None of that may happen. Over the weekend, the Treasury will present the Congress with its "rescue" package. Most Representatives and Senators have said they will support the program "in principle." The devil is in the details, and on Monday it may become clear that extended and heated debate makes it more likely that there will be no "universal solution" at all.

There are still a lot of free market supporters in Congress. They believe that financial companies got into deep trouble on their own and that fixing that is a form of socialism. There may be enough elected officials in this camp to hold up any deal for a long time. They may even be able to kill it in the name of saving tax-payers money.

If the Treasury proposal is in trouble Sunday night, the markets could have another massive sell-off early in the week.

Douglas A. McIntyre is an editor at 247wallst.com.

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