1. If you look at the market response to the failed bailout action in terms of basis points, you will see the drop was significantly higher than that of 1987 and any other recessionary market collapse seen, with the one exception of 1929.

2. Rescuing the financial markets is not up to constituents, which is why we have monetary policymakers mandated to manage our economy and thus stabilize our economy. It should never have come down to elected officials driven by politics. Constituents, from an aggregate viewpoint, don’t have the best solution as to how we must act to rescue the markets. That’s why we don’t elect the Fed Chairman and other monetary policymakers. Even Newt agreed that although the package on the table was not politically optimal for everyone involved, the markets needed Congress to step up and do its job of govern, not pander to politics. After all, their job is to govern, not just listen to constituents. Sure, the voters put them there and they represent constituents, but their job is to make the tough decisions that are best for the country, especially when information assymetries exist, not allowing all constituents to be fully informed about the full details. I know this sounds harsh, but monetary policy is not subject to a vote … we elect the people that appoint/confirm monetary policymakers and that is where the democratic process stops, because quite frankly, the economy is not something we can directly leave up to every Joe and Jane Voter throughout the country

3. If it were as simple as the media portraying it the way you describe, then this would be correct, but unfortunately, the GOP will come out as costing everyone. Dems will milk every ounce of political capital out of this situation as they can and then will sweep in as the rescuers. The reason the public “didn’t support” the plan was because of the price tag and there is a false perception that this was socializing the markets (which it isn’t). If you look at the price data, after today’s failed vote and subsequent plunge, we paid in the capital markets more than what the original bailout would have costed … and that was a direct hit to the country’s bottom line, which the bailout would not have been. So, businesses will fail, retirements will be depleted, and negative macroeconomic effects will accelerate all because politics took over the wheel. In the end, we will likely pay at least twice that which was originally expected, with over $500b lost just this afternoon.

4. By letting political pride drive the process rather than cool heads, the GOP handed all of the strong cards over to the Democrats in this situation. Not only did they come out looking like innocents today, but as I previously said, they will emerge as the rescuers when a package actually does pass. And, whatever plan comes down the pipe will inevitably be tilted towards a Dem agenda, because now we have realized just how critical a bailout is. No one will stand by again for another afternoon in the markets like today, not even the most ignorant bullheaded of the bunch.

5. You’re right … they are all to blame. Dems and the GOP on this one. They all played politics. But, when it comes to people losing money, they don’t care about the vote splits. Voters are not taking the Sept 29 roll call votes to the polls with them. Their image of politicians will already be crafted by the media and how they associate the fallout in their markets related to how it affects their pocketbook, and then drive their support in that direction. If I am a small business owner, and I need economic stabilization and strengthened credit markets to that I can meet payroll next month (and the next 12 months), then that’s the telescope through which I am seeing things right now … not how the caucus numbers and vote spreads stacked up. Once voters/constituents/citizens are affected this way, all that restoration of fiscal conservatism ideology malarkey will be forgotten. Now, those who voted asgainst restoring stability into the financial markets will be looked at as ignorant, stubborn know-nothings, which most voters already look at them as. This just confirmed it for many.

2) One of the reasons that the USA is a republic and not a democracy is because the elected officials are expected to use their judgment in cases where the masses are wrong. Is this one of those cases? I suppose history will sort that out. But I don’t think that Congress is 100% obligated to canvass their constituents for how they should vote. They should listen and then balance what they hear with what they (the Congresspeople) believe is right.

This is exactly the point I make above. Sometimes, elected officials have to stand up for what’s best for the country, even when voters don’t agree with it, especially when their disagreement involves many information assymetries. Just because someone says they’ll vote/not vote for you if you do/don’t do something, doesn’t mean that should drive your actions, especially when the risks/costs are what they are today. If McCain pandered to all of the voters on the war, then there’s no way he’d be where he is today. Congress had the Chairman of the Federal reserve, who is one of the most gifted economists in the worlds with unlimited access to information advising them on what would happen if a bailout didn’t happen and why it was so important, but instead, many Congressmen chose to listen to voters (who not only don’t understand the true situation, but also don’t have all of the information), because they want to get re-elected. Remember, their job is to lead, not pander to voters.

Here’s your justification : 770 points or roughly 7%. That’s 7% in the RED.

you don’t understand how market dynamics work. Ask any other economist or market analyst, and they will show further correlation between the failed vote and the market declines. These results are monumental, and attempting to downplay it only makes you look like you have no clue what you’re talking about. For instance, the reason Wachovia was so low is that trading was halted until its acquisition by Citigroup is approved. The price of Wachovia does not reflect an actual valuation, and certainly doesn’t reflect the valuation of Citi’s purchase price. Also, refer to my points about the comparison of basis point drops, and how that compares to previous credit crises.