Bail Out Down

Well the Bailout failed. Why? Enough people were feeling the heat from the people at home that they feared for their jobs. This is about the worst reason ever for a bill like this to fail. I was not a big fan of the bill as it was written because all the things dems fought for were so weak as to be mostly useless. The oversight and spending restrictions were a joke. However, that does not excuse people who voted against this for political reasons.

I wrote yesterday about the political implications of voting for this bill. The point of my article was not that people should vote against a bill if it comes up for a vote but that it should not have been put up. there is a major complicating factor in putting a bill like this up for a vote and having it fail. The failure destroys the confidence of the market. The market was holding based on the idea that something was coming down the pipe. No we have nothing. Putting it up for a failure was worse than putting up nothing and continuing to work.

The next step is fairly obvious, but it probably wont happen. Congress needs a swedish model bill that buys the equity stakes in the banks. Before they do this though they need to get the people on board with the bill. Look for a change in terminology and a major switch in marketing. The pols need to shift the media story line on this from something tax payers wont like but have to accept to something that portrays this as actually working for them. The biggest way is through some real punitive measures.

People will get on board with revenge in this case. Throwing the ibankers on their ass while helping Homeowners is a bill that could pass. Put together the best bill for homeowners possible, target it so that people feel like they are getting something in the bill and make the republicans vote against an overwhelmingly popular measure. If you want to destroy their political cover you need the public on your side.

Is this going to happen? No. I expect that they go back and throw more bones to the reoublicans, get a worse bill and get slaughtered in 2010 or even 2008.