The Bush administration's massive corporate-bailout proposal, tweaked cosmetically by Congressional power brokers, was defeated 228-205 this afternoon in the U.S. House of Representatives -- and Wall Street responded with a record-setting selloff.
The Dow plunged 777.68, its biggest-ever one-day point loss. At 10,365, the index is more than 27% off its all-time high last October.If we need another perspective on what happened in the wake of the House vote, we can consider that more than a trillion dollars of capital evaporated during a single trading day.
In rejecting the $700 billion bailout, the House actually did the right thing for our country's future, although our representatives accomplished the feat more through systemic dysfunction than collective wisdom. Typically, the finger-pointing is well underway.
For his part, Sen. John McCain just issued a hyper-partisan gem in which he blamed Sen. Barack Obama for injecting partisanship into the failed negotiations, then immediately followed with, "Now is not the time to fix blame."
And so it goes. You can't make this stuff up.
Congress eventually will pass a version of the Bush-Paulson bailout, and it'll achieve the same result -- which is to say, it'll have no effect.
Credit markets already are frozen. Big firms with household names will continue to drop like wormy apples, likewise much smaller businesses, and unemployment will soar instead of merely rising. Our economy is about to slip inevitably below the surface of a depression.
Washington and Wall Street keep calling this a "crisis." Out here on Main Street, we've been telling the truth about that for months.
