Bail-Outs, Markets, and politics

Over the past week-end, the media told the American media told us that if the Congress did not pass the $700 billion bail-out, the economy as we know it would fail. The credit market would freeze, thus nobody could get a loan or even make a transaction on their credit card. The American economy will go south, and foreign investors will leave, leading to a massive depression.

However, the Bail-out bill failed 228-205 in the House. Both sides blame each other and nothing will be done until at least late Wednesday to early Thursday due to Rosh Hashanah. Sixty-five Republicans and 140 Democrats went along with this Bail-out Plan. However, 133 Republicans and 95 Democrats voted against the bill.

The Bail-Out bill, we are told, would stabilize the economy and assure foreign markets that the US government was committed to keep the global economy going. However, what the government was really doing was to assume debt, good and bad, from banks and lending firms so they can keep the economy growing by freeing up money in the credit market. Now, with the defeat of the bill and the two day wait until reconsideration, the economy might take a further correction. The Dow Jones plunged 777 points and more will be lost until a better bill is in place.

It is refreshing to see a bill that was flawed and bad for consumers and taxpayers alike defeated, to force it back to the conference room and renegotiated so it can become a better bill.