House Set to Vote Again on $700 Billion Bailout

On Monday, this same House witnessed the immediate impact their decisions will have. As votes were being casts and the legislation seemed destine for failure US markets careened downward in real-time--the Dow losing 777 points in moments.

The markets still seems unable to recover from this shock. Even after the Senate resurrected the slightly modified bill on Wednesday the markets still dramatically fell another 348 points following the late night Wednesday vote.

The House will vote at midday and doubts still remain if enough "yeas" can be mustered.

Concerns remain if enough Republicans can be convinced to overturn their "nay" votes despite inducements like expanded FDIC deposit insurance, tax breaks, and loosing of market to market accounting rules. Of even greater concern are the potential actions of so called Blue Dog, fiscally conservative, Democrats who may balk at tax cuts. Cuts that are feared to increase the already ballooning deficit. Will this block of Democrats reverse their "yea" votes?

General sentiment seems to indicate that one of the major barriers to passage of the original House bill has been scared away--taxpayer (voter) opposition. Politically, many Representatives seemed to have voted their re-election as taxpayers expressed widespread opposition to bailing out Wall Street.

However, as Wall Street hit these constituents' 401(k), IRAs, and other stock market investments--opposition may have swung to fear.

The panic seems to be on the spread as indicators of economic weakness begin to flood in: Washington Mutual collapses, Wachovia goes into a highly motivated FDIC assisted acquisition, manufacturing goods production drops 4%, and new unemployment claims jumped to 7 year high.

The House vote today is now looked at as only the first battle in stabilizing a shaky economy. Bernanke speaks on October 7 and market makers and economist will be looking for indications of a rate cut at the next Federal Reserve Committee Meeting. However, the inflationary hawks have already spoken--James Bullard, St. Louis Fed President and Thomas Hoenig, Kansas City Fed President have stated cutting rates as inflation creeps in is the wrong move.

Regardless of the House vote and pending Federal Reserve meetings, many are wrestling with what to do next and will it be enough.

The credit knot will take time to loosen and unwind. Speculation mounts--will the bailout have any immediate effect on that front? The new bill requires the stand up of regulatory frameworks and asset management expertise, which takes time. All the while, consumers can't get auto loans and mortgages and major corporations like GE are having to cease operations and make fire sale deals to Warren Buffet to keep the cogs of industry from seizing up.