Gonna be an interesting afternoon for Western civilization

Would this be a good time to curse House Republicans sudden yet inevitable betrayal?

Conclusion:

The Republicans are 67% insane.

The Democrats are merely 40% insane.

I'd like John McCain to call up about 15 GOP members and remind them about patriotism just now. Obama can do the same, remind his folks about fairness, equity, and making sure the little guy does not go down in flames with the economy.

Un f-ing believable...

Gulp. Now what?

If I recall, last week or perhaps two weeks ago -- this really is such a drawn out crisis -- the Dow gained 400 points on two consecutive days on news that the 'rescue package' would be approved. As it stands right now, the Dow has lost about 450 of that 800 percent gain.

"If I recall, last week or perhaps two weeks ago — this really is such a drawn out crisis — the Dow gained 400 points on two consecutive days on news that the ‘rescue package’ would be approved. As it stands right now, the Dow has lost about 450 of that 800 percent gain."

You mean an 800 point gain, I assume. In any case, it appears to me that the Dow is at a 2 year low right now, although where it will be at closing... who knows? But realistically, if traders figure that more financial companies will snuff it (and how could they not?), then it only makes sense that we'd see a large sell-off of those stocks. If they likewise believe that the credit crisis will worsen, then one would expect them to sell off a lot more. That looks like it's happening.

I would certainly hope that the legislature does not takes its cues from the fluctuations in the stock market. So, Wall St reacts badly to the news of the bailout's demise. The bailout would have slowed the meltdown, but there was no guarantee at all that it would have stopped the long term unravelling of the credit markets anyway. Bail out or not, the free money days of buy now pay later are coming to a close, and the markets will reflect just that.

I couldn't agree more Chris.

I don't want to be trollish, but seriously. We have had an elite of both parties who have advocated continual foreign intervention at a huge cost, didn't seem to care while good high-tech jobs were being outsourced, did nothing to stem the influx of large numbers of immigrants who, while hard-working, just don't have the skills (like literacy) to make a positive contribution to needed for a late industrial/post-industrial economy, let the country run huge current account balances, allowed housing prices grow so that finding that affordable 'nest' was impossible for many young couples who could have helped us with our demographic problems ... I could go on. This system was unsustainable, and pretty much everyone out there in the real economy knows it. The answer of elites was predictable corporatist hogwash... heck straight up nationalization would have been preferable to shoving of the worst of the mortgage debt on all of US.

And quite frankly I am surprised; every political economist knows that businesses always try to disperse costs and externalize costs. When they do, resources are misallocated. Here a very brave group of congressmen have said, enough is enough! Its time to lance this boil, let the chips fall where they may. When the smoke clears, the US economy, the world economy, will be the better for it. [Man that was cliche heavy, but I am serious]

Now if you'll excuse me, I have to find a tin cup and go sharpen some pencils.

[...] Dan Drezner: [T]he idea of the package was to prevent a financial mewltdown.  But here’s the thing — no one gets credit for stopping a meltdown if it doesn’t happen.  To use a security analogy, think about what would have happened if either the Bush or Clinton administrations had killed the leadership of Al Qaeda and the Taliban prior to June of 2001.  Even if they had claimed that they were foiling a terrorist plot against the United States, no one would have known about it, and it would have been pretty easy to attack either administration for belligerent unilateralism.  In other words, it was only after 9/11 that the American public was ready to take the actions that would have prevented 9/11. [...]

It would have been nice to have either McCain or Obama show at least a little leadership. Someone explain to me again why either are worth voting for?

And to all the folks with "Impeach Bush" bumperstickers, how about an "Impeach Congress" one? Because no one seems to be taking the crisis seriously. Even if you didn't like this bill didn't you at a minimum have the duty to come up with some alternative rather than leaving the country to crash and burn? And Pelosi. Come on. You had a ton of Republicans willing to vote with you and you couldn't get more than 60% of your own party to vote with you? What?

Well - the Dow goes down again, perhaps another few thousand points.

The thing is that the stock market has been selling at historically high levels for many years now, measuring by the price-earnings ratio. Historically the average PE is about 17 (market capitalisation devided by triling earnings). During dot.com days that was up to an average PE of 31. The dot.bomb brought the average PE down to a 'mere' 24. The bankng crisis last week dropped the PE to 17 - the historical average.

Further drops will bring the PE to below historical levels. This may bring Value Investing back into vogue. Warren Buffett is the most influential proponent of this method, which Buffett's mentor Benjamin Graham espoused. I have a copy of Graham's "Intelligent Investor" around the house: he advocates looking for companies whose shares sell for less than the value of their assets. When I read that I laughed and thought 'rotsa ruck', but if PE ratios continue to decline Valuue Investing may again become possible.

Not to emphasize what should be obvious here, but Sen. Obama has no more background in financial markets and how they operate than Sen. McCain does. President Bush is out of the game. That leaves Sec. Paulson, a Treasury Secretary drawn from the community most people blame for this crisis, with the whole burden of convincing politicians to take a very unpopular vote on an extremely complex subject.

Personally, I have a lot of doubts about the Paulson Plan. I know too little about the details -- in particular, as to the imminence of a system crash -- to offer a firm judgement as to whether Paulson is proposing a necessary step that will forestall a crippling panic, a massive and unnecessary transfer of fiscal authority from an already weakened Congress to the Executive, or something in between. However, I understand Congressional politics pretty well, well enough to know that Congressmen only cast unpopular votes when they have cover. That cover can come through the obscurity of the subject, which doesn't apply here. It can come when everyone else is voting the same way, which doesn't apply here either.

Or, it can come because Congressmen can point to a trusted authority's warnings of disaster if the unpopular measure is not approved. There is no such authority in Washington right now. In an way, that's the strongest indication that we're facing a real crisis, because if we weren't the Paulson Plan wouldn't have gotten nearly as many votes as it did.

“the Republicans killed this bill. Without their cover, the Democrats couldn’t save it, because politically, they couldn’t take ownership of it.”

Translation: The Democrat Party, despite controlling both Houses of Congress, is so totally laking in the ability to provide leadership that we can't even expect them to act to save the country unless the Republicans provide them with "cover."

Is he a McCain supporter? Because that strikes me as a rather damning indictment of the Democrats. Barring a miracle, we're going to have the Democrats controlling the House and Senate next year. Do you really want to give them the Presidency, too?

The Democrats created this problem, and they fought tooth and nail to prevent Bush from cleaning it up earlier. If they're not willing or able to take the hit to clean up their messes, why in the world would you give them the power to make more?

It's pretty impressive that President Bush can do absolutely nothing to address or alleviate the crisis and no one blinks...because it's par for the course. Why look for leadership from the current leader?

Seriously, at this point, we should hold a ticker tape parade if Bush can put his pants on one leg at a time without falling down. That might be the only thing he can't fail at...

Greg Q:
Are you daft? You really think the Democrats are going to provide political cover for House Republicans and Bush? Pelosi said last week that the House Republicans would have to come up with votes. They didn't do it. Why would Democrats vote for this bill and then face a Republican challenger at home hammering them over their yes vote? Get serious!!

Lemmee see if I understand what's going on. Democrat partisans, especially the top dog among House Democrats Speaker Nancy Pelosi (D-San Francisco), are mad because a majority of Republicans in the House of Representatives didn't vote to, as Pelosi and her partisans put it, "bail out their Wall Street buddies."

In other words, Pelosi et al. are angry and frustrated because their Wall Street buddies aren't gonna be bailed out in a manner that lets Democrats tell an angry voting public that Republicans did it.

Boo hoo.

If shock therapy was good enough for the economies of the former Soviet bloc, it's good enough for Blue states full of reds like New York, California, Illinois, etc.

@ 13

Why?

1) Because they're in control of the legislature. They're the people in power. If you run for Congress to be boss and you win, then, well, you're the boss! You wanted to be responsible, congrats, now you are.

2) Because the Democrats created this mess. Honestly, the one silver lining in a tanking economy and a Barack White House and a Dem Congress would be the sweet spectacle of the left finally having to live in its own stink. Usually they foul up, acting like Santa, and then conservatives can come in to do the hard work of cleaning up, which tends to hurt, for which they get thanked by being thrown out. And then the cycle starts again. This time, maybe not.

On a different note, Barney Frank is one of the most despicable people I've ever seen. He's a lucky SOB that ordinary Americans don't realize what he's responsible for.

[...] Daniel Drezner has some interesting thoughts. [...]

"Will Obama decide that he needs to lean on the Democrats who voted no? Will McCain do the same thing on the GOP side? After what happened last week, can he?"

Why would we want to be governed by presidential candidates? Especially these particular candidates, neither of whom has shown any financial expertise?