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Wall Streeters sceptical of McCain-Obama economic magic

Latest update : 2008-09-26

The financial crisis has made Wall Street traders nervous. While they are favourable to the proposed rescue plan, the presidential nominees' intervention in rescue negotiations has not convinced them.

Presidential contenders John McCain and Barack Obama have stepped in to help rescue America's banks from ruin, but on the floor of the New York Stock Exchange traders aren't impressed.

"I think they are both counter-productive," said Art Cashin from UBS Financial Services on Friday, a day after the candidates had an emergency meeting with President George W. Bush on the crisis.

Like others on the trading floor, Cashin thinks McCain and Obama didn't want to miss the spotlight being shone on the potential rescue plan proposed by the US Treasury secretary.

"They're scared to be marginalized by Henry Paulson, who has been managing the crisis from the beginning," said Cashin.

Traders are watching the negotiations on the potential 700-billion-dollar rescue closely. A quick chat revealed their underlying concerns about the future of the stock markets - and the uncertainty of the rescue plan, which has run up against the opposition of Republican lawmakers in Congress.

Reactions to the bailout plan are mixed. Traders generally agree that the basic plan - for the government to buy up the banks' bad debt - is sound.

But they have questions about the details of the plan, such as the timing. Who would get what when?

And some traders say the plan should have other provisions that could make it more palatable for the public, such as a cap on CEO salaries. "The American public doesn’t want to see executives become wealthy at the expense of taxpayers," said Jennifer Lee, vice president of Mogavero Lee & Co.

The sentiment was echoed by James McGuire Jr., broker for Christopher J. Forbes. He added that the plan's impact could be more psychological than financial. “I don’t think it will entirely restore confidence, but it’s a very big step,” McGuire said.

Date created : 2008-09-26

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