Bailout Plan Rejected: Shell-Shocked Market Becomes Volatile and Main Street Launches Attack

Wall Street Plunges Deeper
Yesterday, Wall Street looked like Tarantino just released Kill Bill 3. The market took a severe beating which is unofficially being called another Black Monday as the Dow Jones dropped 778 points due to the killed $700 billion bailout bill.

With 205-228 votes in the House of Representatives the bailout proposal has been rejected. Though the bill held more support from the Democratic Representatives (140-95) it clearly was not enough to sway opposing House Republicans (65-133) and Democrats to get behind the plan. Anxieties surfaced in anticipation for a rejection which could be seen early Monday morning as the Dow Jones took a dive of 7% and failed to recover stirring up more concern on Wall Street.

Mel Watt, a Democratic Representative from North Carolina said, "When the secretary of the Treasury and the chairman of the Federal Reserve tell me that there's a real problem, the stakes become too high for me not to take it seriously. I am convinced that the odds are bad enough that if we don't do something today, we will regret it for a long, long time to come."

Despite the bailout's failure to pass, the Federal Reserve worked to gain global liquidity. The Reserve expanded auction facilities and raised currency swap lines from $290 billion to $650 billion. These actions have helped to beef up the dollar, as the euro fell. While quick measures are taking place to deal with the economic crisis, such as saving AIG, it is clear that revisiting this plan is extremely likely.

Bush Scrambles
Before the market opened yesterday, President Bush said, "Now I fully understand that this will be a difficult vote. With the improvements made in this bill I'm confident that members of both parties will support it."

So now that the plan has been rejected Bush's Administration is working on the next steps to reach out to congressional leaders who were not in favor of the bailout plan. Many believed that with such a tumultuous financial situation, which has been dubbed the worst it's been since the Great Depression, the bill would have been passed. And White House spokesman Tony Fratto was one of the many who predicted legislation would give the bailout plan the green light.

After the bill was rejected Fratto had this to say, "We're very disappointed in the outcome. The president will be meeting with his team this afternoon to determine the next steps and will also be in touch with congressional leaders."

With a strong opposition from Bush's own party, the Republicans believed the bill was an "overly intrusive government intervention in the markets." Clearly the GOP's opposition to the bill was greater than any efforts of being won over by the Bush Administration.

America is Hemorrhaging
While America's economy is in desperate need of an emergency transfusion, many are concerned about the harmful effects the economy will have on the stability of their financial future.

The situation finds corporate big shots and government officials pointing the finger at each other. Timothy Noah, Slate magazine's senior writer pointed out that after the Great Depression the government's expansion meant that Washington was now Wall Street's biggest rival when it came to running the world. But, after the economic commotion stirred up these past weeks and the lack of a unified front in dealing with this problem it appears that neither Wall Street nor the government has proven itself as a global force to be reckoned with - as it stands now a resolution can not even be agreed on.

America is hemorrhaging economically. We need a plan to stop our fiscal death and restore us financially. The how is the problem. With partisan views stepping in it looks like finding our way out of this emergency situation seems hopelessly faraway. And while we rush to pick up the pieces and move toward a plan to reinstate ourselves as a leader in the global economy, China is emerging as a rival power. To put it simply, "They've just put men in space. We can't get 400 congressmen to agree that preventing another depression is a good idea," a Senate aide said.

Main Street Fires Back
The bailout was unquestionably a way to help salvage Wall Street's financial mess. With the rejection of the plan, it isn't the last we'll hear of it or some amended version at least. And voters will be calling Senators to push for more prioritization of Main Streets economic interests into future proposals. The SEIU (Service Employees International Union) has made plans to make 150,000 calls to Senators up for reelection. The SEIU intends to scrutinize and criticize the lack of attention toward easing the financial pains for working families through a broader stimulus package.

Andy Stern, president of SEIU said, "Americans are fed up with politicians who are more concerned about the fate of Wall Street than the fate of Main Street. We are going to make sure voters know which Senators turned their back on laid-off workers, funding for health care, and energy assistance for low-income people in their communities. We have to address the underlying economic crisis affecting working people if we want revive and rebuild our economy over the long-term."

Sources: http://www.reuters.com/article/politicsNews/idUSTRE48S72T20080929?sp=true, http://www.forbes.com/home/2008/09/29/bailout-congress-credit-biz-beltway_cx_bw_jz_0929vote2.html, http://www.nytimes.com/2008/09/21/business/21qanda.html?_r=1&pagewanted=print&oref=slogin, http://www.marketwatch.com/news/story/stand-up-main-street-seiu/story.aspx?guid={A16F4E28-521C-4572-BD3B-83B73E8DD923}&dist=hppr