The House of Representatives rejected the $700 Billion bailout bill proposed by Secretary of the Treasurer, Henry Paulson and the Bush Administration. The market responded in turn by dropping nearly 800 points.
A few months ago, I suggested that investor panic was irrational. Today's reaction was not. The bailout plan, while costly and very risky, was what the market in general wanted, actually maybe even needed. Representatives from both sides were thinking about their current constituency and the reaction to such a large number, had the bill passed. The problem is that they are not looking at the more important constituency...the future.
I'm not saying $700B is a drop in the bucket, but the ramifications of no bill are unimaginable. If banks fail and the FDIC has to come in and save what they can, we'll end up bailing out too much anyways. However that will come at two costs. First, the account holders with more than $100,000, as they'll lose most every penny over that. Second, the future spenders of America. Those of us who own homes now have to ensure that we keep it that way. Because it will be more difficult and costly to refinance or buy new property. Simply the less diverse batch of banks, the less chance of good deals.
Right or wrong, some bailout bill needs to be passed.
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