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Bailout Vote: The Nays Have It
Posted by: McQ on Monday, September 29, 2008

There won't be any vote in the Senate because the bill has gone down in the House.

Dems - 141 Yes/94 No

Reps - 64 Yes/134 No

So, by a vote of 228 against to 205 for, the bill is dead - at least for today.

As the bill was announced in the House, the stock market cratered. When a recorded vote was required, the stock market went into free fall. When the vote was final, and it was clear that the bill had been defeated, the market rallied to 10,800. As of a few minutes ago it was at 10,717 (a little profit taking).

That should tell you all you need to know about how bad this bill is.

Dale will be writing an "I hate it when I'm right" post later today or tomorrow.
 
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Previous Comments to this Post 

Comments
Or how silly QandO contributors can be...I’m hoping you enjoy the recession and Obama Presidency and more Keynesian economics and graft, but take heart in 30-50 years mayhaps some brave lad will be able to resuurect some market-driven reforms...but purity and truth have prevailed...
 
Written By: Joe
URL: http://
Opponents said part of the reason for the opposition from Republicans was what they termed a partisan speech by House Speaker Nancy Pelosi, said one GOP source. House Minority Whip Roy Blunt said he thinks Republicans could have provided a dozen more votes had Pelosi not given her speech.

Pelosi had said that Congress needed to pass the bill, even though it was an outgrowth of the "failed economic policies" of the last eight years.
Some politicians just don’t know when to shut up.
 
Written By: Neo
URL: http://
I think you were a bit premature in saying there was a rally in response to the rejection. It fell nearly 700 points once word got out.
 
Written By: Captain Obviousness
URL: http://
I think you were a bit premature in saying there was a rally in response to the rejection.
That was later. Look at the timeline.

At 1:45 until 2pm, after the vote had been recorded and was out, the market gained about 300 points to the neighborhood of 10,800.

There’s no question it then headed down. But frankly I don’t see that as a particularly bad sign right now.

And btw, it had lost over 300 points today prior to 10am. That in the face of anticipation that it would pass.
 
Written By: McQ
URL: http://www.QandO.net
The Dow is down 717 at this writing (3:32pm EDT). The job at hand is for people in various markets to establish where values are. A government official pitching his mud-pies — crafted with loving care from the finest ingredients — for seven hundred billion dollars will not achieve that. There is grown-ups’ work to do out there, and it is a good thing that this horror did not make it through the House.

fiat iustitia, ne permeat mundus

("Let justice be done, lest the world perish")

Let it bleed.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
With this margin, it is virtually certain that public outcry made the difference. I know I finally got in contact with my representative(’s office) over this, who I am pleased to say voted "No".
 
Written By: Jeremy Bowers
URL: http://www.jerf.org/iri
Quick note: the stock market fell earlier due to fears that the bill would NOT pass.

That doesn’t mean the bill should have passed, but nobody who understands what’s going on could possibly think the market reacted positively to its failure! If the bill had passed, the market would be up a few hundred points now.
http://scotterb.wordpress.com
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
That doesn’t mean the bill should have passed, but nobody who understands what’s going on
if ’they’ understood so well what’s been going on, how did we get here?
And now we’re supposed to believe ’they’ figured out the magic fix in a couple of days, and the magic fix is $700 billion?

This is beginning to sound a lot like Anthropogenic Global Warming to me.
We have to DO SOMETHING!!!!!!!!!

I’m with Billy, let it bleed.
How is it you’re suddenly on the side of that capitalist Warren Buffet Scott?
 
Written By: looker
URL: http://
I think you were a bit premature in saying there was a rally in response to the rejection. It fell nearly 700 points once word got out.
Well, let’s be clear about what happened, and when.

As soon as the speaker calkled for a vote on the bailout, stocks tumbled. For the first 7 or 8 minutes of the vote, the Yeas were ahead. The market still tumbled. Once it became clear that the vote wouldn’t pass, there was an immediate rally back to 10,800.

The timing is very important here, and when you watched it tick by tick, to believe the market cratered from disappointment in the vote, you must believe that the market knew the bailout would fail 15 minutes before the final tally was announced. Because that was when the initial dump in price began.

Let’s remember, that the Dow dropped off over 300 points at the open, not only on the bailouts in Europe of B&B, Fortis, and Hypo RE Holdings, but on some serious concerns about the final character of the bailout. So the "top" of the market when the vote came in was already 300 points below the open.

Once that initial rally after the plan failed tapered off, we saw further losses throughout the day, as investors jumped into treasuries. The 3- and 6-month bills sold off as well, but there were price gains across the rest of the yield curve, slight at the 2-year end and about 4% at the 30-year end.

I think a lot of that is that the market hates uncertainty even more than they hate bad news. Now we don’t know what, if anything, the bailout will be, so we’re seeing a flight into safety as buyers sell stocks in order snap up the 5-, 10- and 30-year T-bond.

I think what happened today was far more nuanced. Stocks tumbled at the open in disappointment at the implications of the details in the bailout bill. Once the bill failed, there was an immediate rally.

After that, the uncertainty of what would happen going forward sent investors into T-bonds.

That doesn’t necessarily mean that they wanted the bailout as written. I think there’s a lot of realization that if the holders of MBS paper have to auction them off, a number of commercial and investment banks are gonna go down the tubes.

Better to wait out the turmoil in the safety of government paper.
 
Written By: Dale Franks
URL: http://www.qando.net
That doesn’t mean the bill should have passed, but nobody who understands what’s going on could possibly think the market reacted positively to its failure! If the bill had passed, the market would be up a few hundred points now.
Wrong, at least it doesn’t make sense. The market fully expected it to pass. It went down for the same reason the market has been trading down since the run-up when it was announced. Once people thought about it a great number of them realized it wouldn’t make the kind of difference they hoped or even make it worse. Once it failed they were joined by those who thought it would and general uncertainty always roils markets as well.

That makes sense to me, though we cannot really know.
 
Written By: Lance
URL: http://asecondhandconjecture.com
Hey, Lance, did you get my email?
 
Written By: Dale Franks
URL: http://www.qando.net
I’m not an economist nor do I fully understand these financial instruments or the provisions of the bill. I do, however, understand how to work with people to get things done, and what we saw from Speaker Pelosi was a perfect example of what to avoid.

The key to successful negotiating is to avoid adversarial relationships and focus instead on the problems. Three Harvard professors – Roger Fisher, William Ury & Bruce Patton – wrote an excellent book on the subject called "Getting to Yes." It matters not whether you are discussing peace in the Middle East or raising your daughter’s allowance; the principles remain the same.

Step one: define your expectations and set your limits. Step two: establish a cordial personal relationship with your counterpart. If a negotiator has bad chemistry with his counterpart, replace him without prejudice. Step three: agree on everything you can and focus on items in dispute. Step four: ask "Why?" Once you understand the reason, the problems are much easier to solve.

Speaker Pelosi should read the book.
 
Written By: arch
URL: http://
Quick note: the stock market fell earlier due to fears that the bill would NOT pass.

That doesn’t mean the bill should have passed, but nobody who understands what’s going on could possibly think the market reacted positively to its failure! If the bill had passed, the market would be up a few hundred points now.
http://scotterb.wordpress.com
Send me a bottle of McMillan 12 year old single malt scotch and I’ll read your blog.

But I won’t start reading until I’m a bit buzzed.
 
Written By: Don
URL: http://
Hey, look at the votes - the RATS could have done it all on their own, they didn’t need any stinking CONS. It just shows that she is not a leader. This could have been done last week rather quickly, but the RATS got there hands on it, the rest is history. Now watch as the FED starts pumping money with the rest of the central banks around the world. The market will bottom at some level lower from here. Boy Paulson is pi$$ed.
 
Written By: Commander Tom
URL: http://
Opponents said part of the reason for the opposition from Republicans was what they termed a partisan speech by House Speaker Nancy Pelosi, said one GOP source. House Minority Whip Roy Blunt said he thinks Republicans could have provided a dozen more votes had Pelosi not given her speech.
Part of the reason?
Is whipping boy Roy suggesting that a dozen republicans would have voted yes had rantsy Nancy not insulted them?

Really!?

I smell bullsh!t.
 
Written By: PogueMahone
URL: http://
Can you link to a timeline, Dale?
 
Written By: Luke
URL: http://
The headlines during the day said "Dow down on fears of vote failure," and then later as the votes were coming in I was reading things like "fears of the bailout failing are sparking a rush to sell..." And, of course, it was a record loss because of the bailout failing. That said, I doubt have a stance on this, however it goes is interesting to observe (my thoughts: http://scotterb.wordpress.com/2008/09/28/bailout-blues/. Right now the bet is that this will get resurrected and passed on Thursday. We’ll see.
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
Can you link to a timeline, Dale?
OK.
 
Written By: Dale Franks
URL: http://www.qando.net
Part of the reason?
Is whipping boy Roy suggesting that a dozen republicans would have voted yes had rantsy Nancy not insulted them?

Really!?

I smell bullsh!t.
Well, since 64 did vote for it, it isn’t unreasonable to think that a dozen were pushed to the other side of the fence by Nancy.


 
Written By: Don
URL: http://
Then oh how they totter.
If the Speaker bruises egos, a dozen House Republicans pick up their balls and goes home?

Me thinks there’s more to it than that.
Me thinks that their constituencies wouldn’t like it. But Pelosi’s unpleasantries were to cheap to pass up rather than to take a stand on something that could be questioned.

 
Written By: PogueMahone
URL: http://
Dale, thanks, but I wanted to compare the Congressional timeline with the Dow Jones timeline so that I could confirm what you’re saying. The Congressional one is hard to find. The HOR website is taking forever.
 
Written By: Luke
URL: http://
What I’ve yet to see is commentators (the "professional" talking heads) talk about something that seems to me perfectly obvious... and ominous:

NOBODY trusts DC anymore.

Even while politicians from the president to the leaders in Congress tell us - nay, ASSURE us - that catastrophe awaits if this thing isn’t passed, polls show overwhelming public opposition to the bailout. Members of Congress have apparently been flooded with phone calls and e-mails from their constituents demanding "no" votes. People either don’t believe that the situation is as bad as the politicians and "experts" tell us, or (worse) are willing to let it all burn down rather than trust Washington to put out the fire.

The dems scoff that the president can’t deliver the votes of his own party.

Republicans sneer that SanFran Nan can’t keep her own caucus in line.

Guys, it’s deeper than that: we, the American people, don’t trust you bunch of thieves and liars any more. You tell us the sky is falling. We won’t believe you this time. You tell us to hand over our money so you can fix it. We won’t open our wallets any more. Enough members of Congress understand this and so vote against the bailout even though "experts" and party leaders say it’s the smart thing to do.

Leaders. The led. The situation. What happens to the situation when the led don’t trust their leaders any more?
 
Written By: docjim505
URL: http://
Earlier today I saw somewhere that a Senate Republican was complaining that the Senate hadn’t even scheduled a vote (delaying it to at least Tuesdays or Wednesday) on the bailout bill, even before the House voted it down. Simply ... there was no hurry .. because it was supposed to go down today in the House.

If it was doing crash-n-burn, why should Majority Leader Reid bother to schedule it quite yet.
 
Written By: Neo
URL: http://
Nowhere in the proposed bills have I seen any measures to correct some of the missteps that got us here in the first place; repealing the CRA, restoring liquidity rules etc should be the order of the day. Then consider some of the other measures...........
 
Written By: Alan
URL: http://
I couldn’t agree more Alan - where are the alternate proposals? More important than that, were are all the investigations into how we got into this mess in the first place, and how are we going to remedy that?

Of course Congress isn’t going to investigate itself and if it did, given who is in leadership now, it certainly wouldn’t find anything meaningful to correct.
 
Written By: McQ
URL: http://www.QandO.net
Dale, thanks, but I wanted to compare the Congressional timeline with the Dow Jones timeline so that I could confirm what you’re saying.
Congress doesn’t keep that kind of timeline.

I watched it live, with the Dow ticker up on one screen, and the House vote on C-Span on the other screen.
 
Written By: Dale Franks
URL: http://www.qando.net
Feel free to believe the market wants them to not pass anything, but if they don’t we get to see Dow 9000 or worse. Go buy some financials or tech if you think no bailout is good. I’ve been shorting the S&P and happy with my decision, though I will close that out instantly if something passes. I don’t think most people realize how bad this will get if nothing is done. Nevermind the stock market, that is small potatoes, the atrocious credit market will trigger a domino effect if nothing is done.

Don’t get me wrong, the bailout completely disgusts me. But I will choose no depression over ideology any day of the week.
 
Written By: Captain Obviousness
URL: http://
Don’t get me wrong, the bailout completely disgusts me. But I will choose no depression over ideology any day of the week.
Of course, it has to be one of those, right?

Depression or ideology.

It couldn’t instead be the desire for a better plan which has the market take the main task of straightening out the mess with the government playing peripheral guarantor and saving taxplayers hundreds of billions of dollars, could it?
 
Written By: McQ
URL: http://www.QandO.net
Captain,

The S&P will likely go to 9000 anyway, or close to it. In fact, it could easily go much lower. The stock market is not the issue, it is the health of the financial system, which this plan is ill equipped to do much about. Stocks will go down because stocks are too high (and have been for well nigh 15 years) and throw in that we will face a deepening recession without a financial meltdown.

If we have a financial meltdown the Dow will go way below 9000.

If the market decides to go to 9000 over this we should be glad, because we got the downdraft, which is coming anyway, going. We can finally get back to owning financial assets at a reasonable price. Personally I am tired of betting on under-performing stocks, despite that ten year bet having been quite profitable.
 
Written By: Lance
URL: http://riskandreturn.net

 
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