According to the latest news from TheAtlantic and C-SPAN (currently, site is down), House Resolution 3997 was overwhelmingly rejected by the House that Pelosi apparently didn’t build. 95 Democrats broke with Pelosi and sided with the House GOP’s strong stance on the bailout. This immediately hit the stocks hard, with Dow dropping like a stone and NASDAQ and S&P losing six percentage points. Glad I didn’t bet on this.
What happened
Right now, it’s hard to tell since it’s so recent. Obviously, both sides were split about evenly (~60% voted with their House leaders in each party). Despite the support by Bush, McCain, Pelosi, and Obama, the House politicians decided to stage a revolution. After all, the House was mainly where the GOP was rallying to the anti-bailout cause. And the House was already pumped up: only a short while ago, the House Republicans preached to the choir on off-shore drilling while the Democrats went on vacation.
What WILL happen
Investment panic is setting in. Dow dropped about 500, NASDAQ lost 6%, and S&P lost 6%. This is on top of an already dropping market. However, some analysts, like economist Andrew Horowitz, actually think that an economic failure is exactly what this country needs (see TWiT 161). It will, according to Horowitz, be a sort of catalyst to reboot the economy, not to mention fixing the irresponsible loan crisis.
You can also bet that both sides will use this as a campaign stump. However, Obama will easily be able to use it better. His entire story has been the economy. With radical drops, Obama can point fingers at the House GOP’s refusal to pass the bailout. McCain will have a harder time, but it might not be that bad. After all, Mac completely supported the bailout, so he can still say that “it ain’t my fault”. Also, the public was basically mixed, with about a third supporting, a third opposing, and a third undecided. My gut feeling, however, is that it will end up hurting Mac, unless Obama does something to look really stupid.
Meanwhile, I think we can effectively conclude that Nancy Pelosi’s tenure is over. She has very little authority, even over her own party. She’s already been pretty ineffective at controlling Democrats, and this is just one more example that the next candidate for Speaker will use against her.
Financially, the feeling is mixed. TheAtlantic suggests that
I find it hard to believe that they’re [Republicans] voting their conscience; they’re voting their electoral interest in November. I hope their constituencies enjoy the bank panic.
On the other hand, chief U.S. economist at HSBC Ian Morris was
quoted as suggesting that the plan wouldn’t actually jumpstart the
economy. Rather, says Morris, “the economy would be virtually stalled
over the next year” (source).
Bailout Fails! - UPDATED!
By Duane Lester • Sep 29th, 2008The House just wasn’t having any of this nonsense:
More than enough members of the House had cast votes to defeat the Bush administration-pushed bill, but the vote was held open for a while, apparently as efforts were under way to persuade people to change their vote.
The stock market is reacting to the news:
The stock market is plunging precipitously, with the Dow Jones industrials down as much as 700 points, as traders feared the financial bailout package would not pass the House.
As the vote was shown on TV, stocks plunged and and investors fled to the safety of the credit markets on fears that the financial system would keep sinking under the weight of failed mortgage debt.The Dow fell 705 points, then regained some ground to trade down 462 at 10,681.
UPDATE:
Fox News quotes a Republican in the House who claims Pelosi’s big mouth is responsible for the bill being defeated:
Opponents said part of the reason for the opposition from Republicans was what they termed a partisan speech by House Speaker Nancy Pelosi, said one GOP source.
“Pelosi’s partisan speech has caused our members to go berserk and may cost us any remaining chance to pass the bill,” the source said.
Pelosi had said that Congress needed to pass the bill, even though it was an outgrowth of the “failed Bush economic policies” of the last eight years.
Bush’s failed policies? I don’t think so.
UPDATE 2:
Here’s the video of San Fran Nan bashing the President and scuttling the bill. My favorite part is when she says that Democrats believe in a free market. Where have they ever shown that? A close second is when she talks of Barney Frank’s great leadership.
I am thinking she’s not going to be speaker for much longer:
