Even the local NPR station broke in to tell me this news, which puts it on par with a declaration of war, or another major terrorist attack. Most likely it is not as consequential as either. According to that graph the New York Times had up as I write, the DJIA started dropping before the vote, and has already risen again (though not, admitedly, above where it started). I'm sure the High Priests of the Market can explain the Delphic utterances of the Dow tonight, but for the moment, I can't follow the narrative. (I don't place as much value in an index created as a marketing gimmick, personally. But then again, I'm no economist, either.)
Paul Krugman probably thinks this is bad news; Nouriel Roubini probably thinks it's good news; Warren Buffet is probably selling short, or whatever it is he does at times like this. My 2 cents? This is probably a good thing. Democracy Now! played an excerpt from FDR's inaugural address (his first one), where he famously said "The only thing we have to fear is fear itself." He wasn't addressing Germany and Japan, he was talking about the US economy in 1933. In 2008 we get George Bush, who is all about fear:
Working closely with my administration, congressional leaders from both parties produced the Emergency Economic Stabilization Act -- a bold bill that will help keep the crisis in our financial system from spreading throughout our economy.Small wonder the Dow declined, huh? As Adam Cohen said to Amy Goodman and Juan Gonzalez:
The bipartisan economic rescue plan addresses the root cause of the financial crisis -- the assets related to home mortgages that have lost value during the housing decline.
Now that this legislation has been agreed to by leaders of both parties, it must be passed by houses -- both houses of Congress. And I fully understand that this will be a difficult vote. But with the improvements made to this bill, I'm confident that members of both parties will support it. Congress can send a strong signal to markets at home and abroad by passing this bill promptly. Every member of Congress and every American should keep in mind: A vote for this bill is a vote to prevent economic damage to you and your community.
This has been a volatile time for our financial system and our economy. Even with the important steps we're taking to address the current crisis, we will continue to face serious challenges. The impact of the credit crisis and the housing correction will continue to pressure our financial system and impact the growth of our economy for some time. But I'm confident that this rescue plan -- along with other measures taken by the Treasury Department and the Federal Reserve -- will begin to restore strength and stability to America's financial system and overall economy. And I'm confident that in the long run, America will overcome these challenges and remain the most dynamic and productive economy in the world.
ADAM COHEN: Absolutely true. The parallels between then and now are very strong. The contrast, I’d have to say, between that speech and the speech we heard from President Bush this morning was also quite stark. That speech, the inaugural address, was one of the great speeches in American history, but one of its great themes was “nothing to fear” and an explanation of the problems and a commitment to change the fundamental underlying principles of American government.Which is where I draw my comfort, for the moment. This time, finally, democracy worked. Maybe Wall Street does need an RTC to take over the investment banks and make them solvent. Maybe we don't need the brutal corrections of the marketplace. We certainly don't want to willingly put ourselves in the position FDR addressed in 1933.
From President Bush today, we got a lot of fear—you know, unless you act quickly, everything’s going to fall apart—no explanation about exactly what’s going wrong—and I think the American people still don’t really understand that—and no commitment to change fundamentals. It’s all about, let’s pump more money into the system; don’t ask any questions.
But maybe the sky isn't falling, and maybe the political restrictions aren't quite as tight as Paul Krugman thinks (he's a fine economist and social critic, but I find he leaves much to be desired as a political analyst). Maybe the Congress doesn't need to do this before it recesses; or maybe it doesn't need to recess until something is done, but in a more orderly manner.
This much is known now: another vote is anticipated, and this may yet pass the House. Then again, it may not. Either way, this is the way the system is supposed to function. And Representatives respond to their constituents, who may not know much about econmics, either: but they know when they're being panicked. And this time, finally, at long last: they don't like it.
UPDATE: This is the kind of thing you just keep updating. Take this, for example:
Like I say: this is how democracy works. Fear is not the tool of a democratic state. According to the NYT, it came down to this:
When the critical vote was tallied, too few members of the House were willing to support the unpopular measure with elections just five weeks away. Ample no votes came from both the Democratic and Republican sides of the aisle.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home.
The vote had been preceded by unusually aggressive White House lobbying, and spokesman Tony Fratto said that Bush had used a "call list" of people he wanted to persuade to vote yes as late as just a short time before the vote.
Lawmakers shouted news of the plummeting Dow Jones average as lawmakers crowded on the House floor during the drawn-out and tense call of the roll, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.
They found only two.
Early in the House debate, Jeb Hensarling, Republican of Texas, said he intended to vote against the package, which he said would put the nation on “the slippery slope to socialism.” He said that he was afraid that it ultimately would not work, leaving the taxpayers responsible for “the mother of all debt.”LATER:
Another Texas Republican, John Culberson, spoke scathingly about the unbridled power he said the bill would hand over to the Treasury secretary, Henry M. Paulson Jr., whom he called “King Henry.”
A third Texan, Lloyd Doggett, a Democrat, said the negotiators had “never seriously considered any alternative” to the administration’s plan, and had only barely modified what they were given. He criticized the plan for handing over sweeping new powers to an administration that he said was to blame for allowing the crisis to develop in the first place.
And it just kept going, bottoming out at 777 points down.
Time to buy shares in Theology of Abundance! Elijah! Elijah!