Stock markets fell at the news Congress had rejected the bailout plan [AFP]

Analysts and economists from around the world give their reaction to the US Congress's rejection of the $700bn bailout plan.

"I think we're fast going form superpower to super-disaster and I don't say that with any happiness - I live here, I care about this place and I'm certainly deeply, deeply and increasingly upset with the directions that we're going in.

It looks to me like a basically daily-dollar short bailout - which was very flawed - was crushed by a bunch of people who imagine that they can go it alone, that we are an island to ourselves and that each group can only fend for itself and somehow at the end - with everyone looking only out for themselves - we can have a good solution.

We saw where that got us - that produced this crisis, and that's produced a bad response to this crisis in which we voted down the lifeline that was going to be tossed to us and we are now going to swim through very rough waters with no life jacket."

"Ninety-eight per cent of people who follow markets clearly expected this vote to go in the opposite direction to the way it has so it does come as a shock to all of us.

I think there is huge disappointment.

What we're looking for is financial stability and what we were looking for in the US was the start of the creation of some financial stability after a year of very difficult markets.

We know it isn't the cure and there's a long, long way to go but, if it provided at least the key to a rethink and it got banks into a more settled position, then investors could start to look at the future in a slightly different manner."

"I think 'globalistaion' will continue [despite the crisis], but ... there will be more global agreement on regulations.

The trend towards deregulation all over the world will slow down, but that's not going to impede globalisation in general."

"I think there was real shock - even apart from the financial markets - that congress didn't pass the legislation.

It looks like the American economy is turning on the edge of the abyss and the fact that congress wouldn't put in a systemic plan to really solve this problem is really quite extraordinary."

"The Republicans in the House of Representatives are playing chicken with the world economy.

The pro-deregulation people, the Republicans who voted this down, are the same people who have deregulated financial markets over the last 30 years.

The people that got us into this mess are now the ones that want to wash their hands of it. It's a little hypocritical.

This is a very imperfect bill ... but it is still better than the alternative, which is inaction that risks bringing the meltdown of the US economy.

The danger is that every day that passes, credit is less available, companies are starting to scramble; we risk massive layoffs, and then we have more mortgage troubles and more financial crises as the economy slides downhill."

"The bill was very poorly designed for taxpayers and they just didn't buy it and that is a political failure.

The real implications of this are hidden.

World markets are reeling from the impact of the crisis [EPA]

If there is not a bailout for the financial institutions, we may have substantial bank consolidations and federal responsibility anyway, so this is political disaster.

At the end of the day, the fact that we have the entire financial system locked up and credit lines not flowing is the problem that we really need to deal with.

The Federal Reserve [the US central bank] will loosen up in interest rates.

The consequence of not having the treasury do this [pump money into the US finacial system] is that it will also have to print money, which will lead to an increase in inflation and the decline of the dollar.

We in the US are starting to look like a 'Banana Republic.'

"What happended today on Capitol Hill was a terrible outcome.

For all its imperfections, this piece of legislation needs to pass ... This is a very fragile moment.

The Republicans clearly do not want to buy into this legislation and they do not accept this approach and this is a real problem.

What this legislation tried to do was to begin to take assets off the market and begin to put a price-floor under this asset defaltion that has now set in.

Now is the time to secure a much, much larger stimulus package for the US economy.

It is no good securing the supply of finance if you haven't ensured the economic conditions that create the solid demand for that finance.

Funding for spending can always be found, if need be, by the treasury issuing bonds and, if need be, by selling them directly to the Federal Reserve.

Then, as conditions stablise, the Federal Reserve can withdraw the liquidity it has created in an emergency.

We need to a further extention of unemployment insurance as we are beginning to see the fiscal crisis spread to US states as jobs are lost and tax revenues fall.

The states are bound by balanced budget requirements and the federal goverment also need to make direct transfers to the states to help them balance their books.

There is also room for infrastructure spending that has been neglected for many years.

Well it's somewhat surprising, particularly because we'd been looking, I'm embarrassed to say, rather smugly at the US financial system given our very conservative and well capitalised banking system here.

There could be more troubled times for the money markets [AFP]

I would guess even in the absence of short-term action by congress we'll see bank action by the treasury.

And foreign institutions including Canadian ones and banks from REU and Europe will also be participating in these semi private and semi public bailouts as well.

This is the age old question – China holds such large amounts of US dollars but would face huge capital loss in event of huge solar depreciation.

So it's pretty clear they're not doing that, surprising thing today is like of violent action on currency markets – not big swing on US-Canadian dollars for example.

Overall I'd say it’s a reassuring development for the world economy that there haven’t been large movements in currencies.

It’s true that JP Morgan Chase is becoming a much larger institution than it was six months ago as a result of is participation in these semi-public, semi-private takeovers.

But they had deposit insurance, and were more diversified than some of these failing institutions and their actions themselves by which they take over these failed institutions lead to a pricing of some of these toxic assets that removes much of the uncertainties about their values going forward.