Call it a political self-fulfilling prophesy, or economic reality, or call it macaroni, but today, after the bailout bill failed in the House the major financial markets expressed their concern by promptly collapsing: down 777 points in the Dow, down nearly 9% in the S&P 500, a mainstay of most retirement portfolios (including my own), and over 9% in the NASDAQ index.
The problems that led directly to this financial market meltdown were caused by years of shortsightedness by a group of cartoon villains ideologues known as the Republican Party. Today, that party’s House GOP Caucus had little or no problem undermining the current effort to “solve” the problem (or at least to head off disaster, however inefficiently); this is, in many ways, like last week redux, when House Republicans balked, only without any overlay of an attempt to forestall the Presidential debates. House Republicans did so again today despite the fact that their own “leadership” had signed on to a bailout package that looked, other than a little bit of Democratic lipstick, like the pig of a giveaway that Secretary of the Treasury Paulson presented. (Did you’all know he used to work for John Ehrlichman in the early 70’s? Just saying.)
The rationale of these cartoon villains was that it’s socialism, which is an affront against God and His Holiness Saint Ronald Reagan they fully intend to demagogue Democrats as “tax and spend liberals,” even when what the Democrats are doing is providing a bailout to Wall Street engineered by the Republican President’s Administration. So… the House Republicans feel that their constituents didn’t like the bailout package… so they would do “the popular thing” and both oppose and demagogue it.
I guess later in the week, we’ll find out how much their constituents like the consequences of their political chicken game: an evaporation of 9% of their net worths overnight. Some, such as Big Tent Democrat at Talkleft, suggest that the Dems pass a party-line bill suited to the Democrats’ vision on this, including much greater oversight over Treasury, insistence on equity purchases, massive regulatory reform, and while we’re at it, national health care, and everything else Dems want, after which, the Republicans in the House can go f*** themselves, and we can then dare the Senate Republicans to filibuster it or Bush to veto it. In short: the Republicans (many of whom are McCain’s friends, though they have probably just ended his chances for the Presidency in one fell swoop with their move, which after all, is only about their own seats) have proven for the umpteenth time that in today’s Washington, bipartisanship = date rape.
Most likely, there will be some minor tweaks of basically the same package, and it will be passed by a slim margin later in the week. Don’t get me wrong: it’s a bad bill. But as bad as the bill is, I suspect that just today’s market losses probably exceed $1 trillion, if not $2 trillion, making the $700 billion bailout look almost like a bargain. And that’s just the beginning, before the bad economic cascade effects start (and they will). Not that this excuses Congress from writing the best bill possible (as if!)… but it is clear that inaction will likely be calamitous. So… I think some bill will be passed by the end of the week, at least in the House.
If not… I would suggest that available investment capital be used on such stand-bys as gold… petroleum… canned goods… bottled water… ammunition…
tdog
I noticed that the state with the most no’s on the bailout seemed to be W’s own, Texas. I thought it odd. Is Big Oil waiting for the prices of everything else to drop before they buy cheap?