Drudge reported that the Dow plunged 500 points. Something happened. I’ll post more as it comes in.
Update:
Looks like investors are fearing the bailout will not pass. Dow down now 700 points.
Update II:
I’ve heard several unconfirmed reportst that the bailout has not passed. One that it failed in the Senate and the other that if failed in the House. Take this with a shovel of salt.
Update III:
The bailout vote has stalled. This seems to be similar to an earlier story, but with a new headline that sounds more ominous. Sheesh, can’t these guys get the information out there?
Update: IV
They’ve changed the title of the story back. Christ.
Update V:
Okay, looks like the vote on the bailout has indeed failed.
The US House of Representatives has voted down the $700 billion emergency rescue package for beleaguered financial companies.
217 votes were needed for the bailout to be passed. Only 206 votes were cast in favour, by 141 Democrats and 66 Republicans.
More here. Looks like the vote is being held open and there are attempts to persuade some of those voting against to vote in favor.
Note: I’ve changed the title of this post to more accurately reflect its content.
UPDATE (Dave Schuler): With the same unerring instinct for self-destruction that Illinois Republicans have been demonstrating in recent years, the House Republicans have now taken ownership of any problems in the broader economy that take place as a consequence of their refusal to vote in favor of a rescue plan for the financial sector. I have no comment on the pragmatics of the plan. I don’t think anybody really knows whether it will work or not but the market was rather obviously expecting them to pass a plan and they’ve refused to do so.
Look, they may well be right. Leaving well alone might be the best course of action. But I seriously doubt that anybody would arrive at that conclusion by the first Tuesday in November and after that it’ll be too late.
UPDATE (James Joyner): Dave’s likely right on the politics of this. While I’m not at all sure that passing the bill was the right long term policy, it was likely 1) the best thing for the short term stability of the markets and 2) bipartisan and thus not politically costly.
This photo, currently topping the front page of YahooNews, somehow seems apt:
Update (Steve Verdon):
Well, I don’t think this failure of the bailout is going to be the end of the world. In watching the Dow it looks like things are slowly making their way to the 10,500 mark. If it was as necessary as the law makers made it out I’d have expected free fall in the stock market and we aren’t getting that….yet.
As for what went wrong the early word is that Nancy Pelosi’s partisan speech on the floor set a sour tone. Still, I’m a little doubtful that the whole thing was killed because the Republicans were annoyed at Pelosi’s grandstanding and propaganda.
Update (Alex Knapp):
I’m not as surprised as Steve that stocks aren’t in a total free-fall. There’s a couple of reasons for that. (1) The Fed’s boosting the supply of cash for loans to banks, and (2) Citgroup’s smooth takeover of Wachovia, which is one of the banks that was considered on the brink of failure. I think that these two factors are cushioning the market right now. Additionally, there’s no question that negotiations over the bailout are going to restart. If a bailout proposal fails a second time (not just a revote, but a different bill), then I think that the markets are going to have a real problem.
UPDATE (Dave Schuler)
Nancy Pelosi had already been reported as demanding that Republicans produce more than 100 votes in favor of the bailout before imposing discipline on the Democratic caucus. The Republican refusal to support the bill left Democrats in competitive races and ideologues the freedom to vote their political preference. At this point I’d be very surprised if a bill more palatable to rebelling Republicans will be brought up. The Democrats are far more likely to pursue defectors from within their own ranks. Brad DeLong’s advice exemplifies this course:
Bring Congress back into session after the election and go for the Swedish plan: nationalize the insolvent large financial institutions: dare Bush to veto that after the election
