Panic struck global financial markets overnight as the US House of Representatives kicked out the US$700 billion financial crisis combat plan.
The Dow index suffered its worst one day drop ever plunging 777 points, or 7 per cent.
228 members of the House of Representatives voted against the Emergency Economic Stabilisation Act compared to 205 who voted for its implementation.
The US government now has little power to bail out further institutions, fueling deep concerns for the US economy as well as international credit markets.
Prime Minister Kevin Rudd, speaking to the Nine network described the news as a “a bad development”.
A revised proposal is expected to be put before Congress again this Thursday.
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