Asian stock markets were rattled this morning in the wake of the US Senate’s decision to reject the $15 billion dollar government loan package for Detroit’s big three automakers.

Asian stock markets were rattled this morning in the wake of the US Senate's decision to reject the $15 billion dollar government loan package for Detroit's big three automakers. In early morning trading Japan's Nikkei 225 stock average slide more than 5.6 percent and Hong Kong's Hang Seng index tumbled 6.9 percent. Markets in South Korea, Singapore, Australia and India also took a plunge, setting up what could be a terrible day for Europe and the US.

As expected auto stocks were hammered, Japanese automaker Toyota was off by 10.6 percent while Honda faired slightly worse at 12.9 percent. The Koreans weren't spared from the carnage either, Hyundai slid 8.5 percent and Kia was down by 8.4 percent.

The blame is being placed on bailout talks that collapsed between Republicans and Democrats in the Senate, as the several Republicans raised objections to the bill passed in the House of Representatives. One of the key sticking points was the lack of UAW concessions in pay, a move that would have brought their wages more in line with those paid by Japanese automakers.

One of key factors that has investors concerned is that many suppliers make parts for more than one automaker, if one of the supplier's major buyers defaulted on payments it could force the supplier to shutdown or layoff employees which could effect production of products that other automakers need. This could lead to a ripple effect which could cause bankruptcies to spread across the whole industry causing both carmakers and suppliers to go under, and prolonging the global economic downturn.

This creates a bleak picture ahead of Wall Street's opening today as the Dow futures are predicting a loss of 3.3 percent. Adding more pain to a string of bad news is that the US dollar tumbled even future against foreign currencies, and new unemployment benefit applications surged to their highest levels since November 1982.

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