Sep 29, 2008

Bailout vote, language of the bill and stock market response

An update to the whole "bailout/rescue of credit markets" issue. If I had mentioned somewhere on the internet that the bailout was socialism, I would like to take back that statement. The issue is more complex than I could initially simplify, and Ben Bernanke's and Paulson's panic seems somewhat justified. There is no point going into a depression, right?
By now, all of you know that the bailout vote to assuage the financial crisis failed in the US House of Representatives. What I am about to discuss is not so much about who voted in which way, or even the discussions leading up to the bill provisions or how the markets responded. You can read about voting records here and you must have heard that the "Dow" fell 777 points. Isn't that cute? The venerable Dow Jones Industrial Average decides to fall by a memorable number like 777 (more). If you love decimals, of course the index fell by .68 more, but let us not harp on a few billions (the worth in dollars when you convert the points).

Even so, thankfully the markets did not crash today. They were already down 300 odd points when they suddenly plunged down to 688 points and then fluctuated back and forth between -400 to -700 eventually ending the day at a good bottom. Now, coming back to the bill, the Paulson bailout plan for which McCain suspended his campaign, that one.....

what really concerned me is that the bill, is actually titled as is an amendment to an existing bill
H R 3997 RECORDED VOTE 29-Sep-2008 2:07 PM
QUESTION: On Concurring in Senate Amendment With An Amendment
BILL TITLE: To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes, and for other purposes
Oh, pleasssssssseee give me a break! Call the bill what it really is, A (purported) shot in the arm to the credit markets and a bailout of bad business decisions by exceedingly large number of financial institutions getting caught up in credit swaps. So unless the clerk of the US congress made some mistake in the bill title, this is probably the funniest title I have ever seen for a bull, oops I mean, bill. Sleep well, the market may crash tomorrow by 2600 points. Or not. I cannot predict things accurately nor can other economists.
if you want to read some funny English, check this out:

9/29/2008 9:27am:
Pursuant to the provisions of H. Res. 1517, the House moved to agree to the Senate amendment to the House amendment to the Senate amendment with an amendment.
9/29/2008 9:27am:
DEBATE - The House proceeded with three hours of debate on the motion to agree to the Senate amendment to the House amendment to the Senate amendment with an amendment to H.R. 3997.


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