So here we are the day after the great rejection and t he market is attempting to recover. As I write, about noon EST, the Dow is up about 200 points — still 600 points to go to even get back to where we started yesterday before the great rejection. Two of my favorite commentators last night, Ben Stein and Paul Krugman, were in agreement that the bill was imperfect, very imperfect, and that the Treasury Secretary was asking for powers that required usurpation of the Constitution. That said, they both agreed that Congress was playing with fire and that the entire economy could be brought down in ruins.
My own take is that this bill was very badly presented. This was not intended to be a bailout of the banks but a bailout of you and me. Credit markets are currently frozen because of the uncertainty over the value of some of the assets that banks hold. This move was planned to unfreeze those markets — for the benefit of those of us who need to use credit, whether that be a credit card, a home loan, or just plain store credit. The best analogy that I can think of is a City Council refusing to send a fire truck to a house in flames because the owners had not paid their property taxes. Meanwhile the blaze is threatening all the other houses on the street. Yes, indeed we should punish the delinquent, but not at the expense of our own homes.
So, where next? It would seem to me that someone has to persuade members of Congress that this bill does indeed help the homeowners down the street to continue to analogy of a house fire in the neighborhood. They in turn need to stand up and persuade their constituents of the same. This needs to be done in a bipartisan manner. When the country is at war, and we are perilously close to being in the same position as we would be if we were at war, then politicians of all stripes need to stand together for the good of the country. The time to debate the details of a bill and to make the necessary compromises to make it acceptable for everyone is before it comes to a vote, not afterwards. And let’s cut the partisan crowing of the Speaker of the House!