Robert M. Cutler on Energy and Eurasia

United States market declines on Monday were well under way in New York before it became clear that the US House of Representatives would vote down Treasury Secretary Henry Paulson's US$700 billion financial sector bailout proposal then in front of them. Every member of the chamber is up for re-election this year, and the Republicans who made the difference on the bill had been hearing from their constituents against it.

Hyped by its backers as the last thing preventing the entire United States economy from sinking into a black hole of immeasurable depth and torment, US Treasury Secretary Henry Paulson's multi-billion dollar financial rescue bill was passed by the Senate on Wednesday evening - and those Asian markets that were open barely blinked.

Pakistan's economic outlook, already darkened by internal violence, strife on its border with Afghanistan, soaring inflation and a plunging stock market, took a turn from bad to worse this week with the decision by Standard & Poor's to downgrade its foreign-currency rating. Along with other emerging stock markets, Pakistan's has taken a battering as global confidence has eroded. The Karachi All Share Index is down 40.5% from its high on April 18 this year, the Karachi 100 a similar amount, and the narrower Karachi 30 is down 47.4%.

Ukraine is in the midst of a financial and banking crisis, exacerbated by political turmoil, that has driven the principal national stock equities indicator, the PFTS Index, down 78% from a high of 1,209 in mid-March to 266 on Monday. The country relies heavily on external finance, and its banking system is by some measures the most at risk after Iceland’s, which collapsed only days ago. On the basis of the cost of its credit-default swaps, Ukraine is the least creditworthy of all of Europe’s emerging markets.

Kazakhstan, whose economy has endured a switchback progress since independence from the Kremlin in 1991, is discovering the benefits of salting away wealth in the good times as it seeks to survive the global downturn without recourse to foreign aid.

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