$746 Billion Down the Tubes -- Congratulations Congress!

While Congress was busy debating and voting down the $700 billion financial rescue package, one of the key arguments against the bill was that our voted officials didn't feel right risking $700 billion in taxpayer money on a 'bailout' of the Financial sector.  In voting the bill down, our elected officials may feel like they have done their constituents a service by protecting their money. 

However, with a decline of 6% today, the S&P 1500 has now erased $746 billion in market cap alone.  This doesn't even take into account the lost GDP that is likely to result from the continued deep freeze in the credit markets.  Once again, Congress has done more harm than good for the 'good of the people.'  What's worse --  that Congress couldn't put partisanship aside and come up with a solution, or that we put any faith in them in the first place?  Nice job Washington!

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Comments

[curiousGeorge]

Yes, but if it hurts Wall Street more than Main Street we will call this a win.

[curiousGeorge]

Yes, but if it hurts Wall Street more than Main Street we will call this a win.

[me]

Look, those companies are probably bankrupt anyhow. Remember the dot.com bubble?

Second, where are the short covers? Oops, it is illegal to short stocks that may go down.

They debated 3 months on Iraq and got it wrong and now here is another trillion dollar debacle and we are to believe they got it right in a week with no debate?

Maybe we should just "trust" the idiots that brought us this mess to bail it out.

I, for one, called my Congressman and thanked him for his "NO" vote and asked him not to change his mind. I was assured there was no chance of that.

It didn't wok in Japan and it won't work here. I haven't understood the democrats carrying Bush's water on this on anyhow.

[j'adoube]

Bespoke guys, you're confusing a temporary market dislocation from a permanent case of ultimate moral hazard.

The former is one day's pain (maybe one week's or one quarter's). Severe pain, yes, but it won't kill the patient.

The latter could send us into an economic malaise that could last a decade or more, like Japan's.

[PTDBD]

Wah, wah, wah...When this beast reached record highs on vapour investments and spiked accounting there were no moves to "calm the markets".

Oh yea, nobody wants these toxic loans that the robber barons cleaned up on, but it's perfectly ok to put them on the backs of the taxpayer.

[Jason G.]

The $746b in losses in the stock market aren't quite the same thing as the money spent by congress... although it is a provocative comparison, it is essentially meaningless.

The stock market is priced by marginal trading -- we claim the $746b was lost today because on Friday it would have cost you that much more than today. In reality, what you're buying is the stock's underlying value (a functioning business, assets, etc), not the stock price. Most people forget that and think that price fluctuations are important... they don't mean anything unless you actually buy or sell at that price, or are closed out by a margin call.

Congress wasting $700b of money with legislation is entirely different... it has to come from debt, or taxation, neither of which will help the economy.

The problems in the credit markets are a bigger problem than the stock market prices, but quite frankly, the stock market has a way to fall before they really catch up to the reality in the credit markets.

[cpugh]

What an idiot. This problem was not going to be solved by a $700B bailout.

[just doug]

another issue that makes the comparison meaningless is participation in the stock market is entirely voluntary; financial participation in any government funded bailout entirely isn't, an act which if perpetrated by a private entity would be termed robbery or extortion.

The arrested, childish level of maturity on display by people crying for mommy government to come make it all better is absolutely appalling and disgusting. That people can even think that government can somehow make losses disappear rather than simply move them around is utterly stupefying. Bailing any company out guarantees a lower standard of living in the future because resources are prevented from being moved to their best use. The pie gets smaller, and the bailout gives a larger slice to the politically connected morons that caused the whole mess. Do you also think if we took all of Bill Gates' money and gave it to a crack head the world would become wealthier and the pie larger? That's exactly what any bailout bill is proposing to do.

[dj]

the FDIC are doing a wonderful job on the work outs, FED will have to up the rate on bonds to cover the risk, main street will slow,but life goes on

[Deborah]

You've got to be kidding....

The market is still extremely over valued and it is disgusting to make a pretense that it is fairly valued at the expense of taxpayers.

[Lisa]

Wow, you've GOT to be kidding me. You just lost a reader. I can't believe your sorry excuse of "reasoning."

[Down Jones]

Nice Charts, wrong conclusion!

[Anonymous]

The markets already priced in a very likely possibility that the bill will be passed. Even if it did get passed, it would still likely have been a down day for the market, especially considering the turmoil in the European markets and their new bank failures. Remember the DOW was down around 200 points on that before even the results of the bill was announced? We would have suffered around 2/7 of 746 Billion of losses had the bill been passed..

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