So, the bailout bill has failed.
Cool. Scary too, but cool. I hope it stays this way.
As word got out that the bill was failing, the market fell. It fell a lot. It fell more than ever before, even more than it fell on 9/11.
Of course, when I say “the market,” I’m talking about the Dow Jones Industrial Average, which isn’t really the market, it’s just an indicator of the market. And the market isn’t our economy, it’s just an indicator of our economy.
Look at it this way. The Dow was down to somewhere around 10,600 a couple of weeks ago. Then, as the bailout bill started working its way through congress, it went higher for a while, as everyone in the financial sector thought they were going to get a few hundred billion dollars without having to work for it. Now that they’re not getting the money, the Dow is back down to around 10,400. Which is probably where it belongs.
The point is, the Dow wouldn’t be jinking around like this if the politicians weren’t screwing around with this bailout. Instead of trying to judge the market and handle their money wisely, everyone is busy trying to guess what congress will do. Or worse, trying to change what congress does.
For example, if you’re running a financial institution, and you’ve got a lot of “toxic” securities, you might have been thinking of accepting another institution’s offer to take them off your hands for, say, 30 cents on the dollar. It would be a loss, but you’d receive liquidity in return. However, as long as Treasury Secretary Paulson just might get a $700 billion authorization next week to buy them from you at a higher-than-market price, you’re going to sit tight and see what happens, aren’t you?
I think a lot of this market volatility is really just an effect of congressional volatility.
I hope.
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