Who Really Needs to Back the Bailout?

The proposal formerly known as the Paulson Plan is in trouble.

We have suggested that new policies are difficult to pass, especially in a short time frame.  The market incorrectly responds to any apparent agreement between some of the parties, thinking that a plan is imminent.

What is Needed?

Any plan needs support from the following:

• A majority in the House.  Since some House Dems will oppose the bill (they need to, and will be released by the leadership if their votes are not required) some GOP votes are required;
• Senate Dems;
• Senate GOP;
• President Bush and Sec. Paulson, since the bill must get signed;
• The candidates, since they have the power to derail the proposal.

If there is any significant opposition, there are various rules and procedures that can delay proceedings for days -- or longer.

Getting Back to Investing?

The market "voted" last week on the need for some plan.  We are about to learn whether such a massive policy can be adopted in a short time. Congress has been asked to accept the equivalent of a declaration of war.

Even Warren Buffett made a Pearl Harbor analogy. As we have noted, it is our misfortune to be dealing with this during election season and in crisis mode.

Investors looking for the time to buy should watch carefully for a strong indication that all of the relevant parties listed above are truly on board.

Comments

[debtacid:]

A little political musing...
Democrats are not stupid. Sabotaging this bailout will hand the election to Obama. If it passes too soon and the economy seems to stabilize McCain may win. If it fails, central bankers will lose the control of the political system they have enjoyed since 1913. In January, Obama and Democrats may be in the position to remake the financial system any way that suits them. Welcome to the NEW, new world order.

2008 Sep 26 02:09 AM

[zep:]

You put this nonsense up on another blog. I recall the market fell 350 points after Palin's nomination. It may vote on McInsane's future later today.

2008 Sep 26 07:41 AM

[sumosama:]

stellar, you'd be hard pressed the to make the case the market slide was related to Palin. The gyrations have more to do with the crisis / good news of the moment.

2008 Sep 26 02:22 PM