Counting the Votes

The House is right this minute voting on the bailout and apparently the Dow and other stock indexes are going nuts, literally changing as more votes come in.  With a surprising number of "no" votes coming early, the Dow fell 700 at one point.  Right now (2:04 EDT) it's down 436.  As I noted in an earlier post, don't assume that the financial sector's view of this bailout is equivalent to it being "socially desirable." 

All of that said, we are really living through history here.

213pm update:  it appears as though the bailout may go down.  The votes to defeat it are there and they are apparently extending time to try to convince folks to change their minds.

215pm:  CNN now reporting it has "failed."  Dow down about 500 or 4.5%.

300pm:  It's interesting to read the gnashing of teeth on conservative blogs like National Review's "The Corner."  They are upset about it going down.  Why?  Because it will make the GOP look bad and perhaps even destroy whatever's left of McCain's candidacy.  All I have to say about that is this:

This just shows how little establishment conservatives really care about markets.  It's about winning elections period.  You cast your fate with the statists like McCain and the GOP generally, you deserve whatever you get.

Comments

[Scott]

Hooray!...for the moment...but will chicken house members change their mind on a re-vote if the markets keep falling so sharply?

[Maxx Mantooth]

While I would love to believe that this NO Vote is permanent, the overwhelming number of calls to congressmen by people shouting NO amidst varying profanities, I remain skepticle. When in the last decade (if not longer) have we seen the government turn down an oportunity to obtain more power? My biggest fear is that the bill will simply be retooled, and then revoted upon. This is simply one bill that needs to disappear.

However, for the first time in a long time, Kudos to the representatives who LISTENED to those whom they are supposed to represent

[Roger Koppl]

Great comment on establishment conservatives, Steve. Yes, yes, a thousand times yes. I respect the choice of an earlier generation of liberals (in the classical tradition) to forge an alliance with conservatives. Their common enemy socialism was a big scary monster for most of the 20th century. No more. It is long past time for a divorce. Where is Tammy Wynette when you need her?

[Ivan Pongracic, Jr.]

Roger, I wonder if we have your Big Player effect at work here. Would the stock market crash havee been 777 on this day (or even this week in general) if it wasn't for Paulson & Co. creating this expectation that $700 billion will be injected into the system? If they had not proposed anything, would we have seen this? Is this maybe an example of government itself destabilizing an already highly problematic situation?

[Daniel]

What is also problematic is that some members may now rethink their votes in light of the stock market reaction.

[Roger Koppl]

Great remark, Ivan. These guys thought taxpayers were going to get stuck with the tab and suddenly that seems less likely. The market would have to drop on such news. Thus, if you look *just* at today's drop it's not yet clear whether Big Players is informative. The larger point, however, is that we have this on again/off again bailout with an uncertain and highly politicized role for the government and a Fed far from equilibrium. This chaos seems to be making markets more subject to herding and contra-herding just as Big Players theory predicts.

[Rafe Champion]

Two dumb questions from down under.
Who actually gets the trillion?
What happens to the people who have defaulted on dud loans under the bailout versus no bailout scenarios?
http://clubtroppo.com.au/2008/09/30/who-is-being-bailed-out-who-benefits/