The proposed $700m bail out of the US Economy and Wall Street put forward by George Bush is stalling as legislators are worried about the cost and the governments level of involvement in the financial sector. However Bush remains optimistic that plans will be passed as Congress have vowed to stay in session until a deal is done.

The stalling created nervousness on this side of the pond and sent the FTSE down 109 points (2%) to 5,088. The bad news was compounded by Banks announcing that mortgage rates were on the increase again as liquidity in the market remains non-existent.

The FTSE ended the week at 5,529.90 taking the fall for the first half of the year to 14.4%, the worst performance of the index since 1994 when it fell 14.6%. The continued sell-off of stocks came as oil hit $142.69 a barrel, news which reverberated around world markets. Analysts had initially predicted a poor start to the year, but with better prospects for the second half of 2008, however this optimism is waning and so it could be a bumpy ride all the way in to 2009.

The US Federal Reserve has cut interest rates by a further 0.75% from 3% to 2.25% as it aims to counter the credit crunch and its knock on effect to the markets. The move comes after the news that Bear Stearns was in trouble and a swift takeover deal was put in place with JP Morgan Chase as suitor. Some commentators are suggesting that the US is already in recession and the interest rate cut should have been 1% rather than the 0.75% delivered.

However the US Markets have reacted positively to the news and the Dow is currently up over 300 points. The anticipated cut also gave renewed cheer to the FTSE which ended the day up over 190 points and reversed much of yesterdays losses.

Undoubtedly there is still more troubled times ahead and the markets are currently places for the brave investor, but let’s enjoy the good news while we can.