The biggest news of the day is that the financial bailout bill failed on the House floor today, and the Dow Jones Industrial Average decreased by 777 points. One phrase you will hear a lot over the next couple days is “biggest one-day drop in history.” That’s true, but not helpful. The stock market lost “only” 6.8% of its value today, but it was nowhere near the worst drop in history. For example, on the “Black Monday” drop on October 19, 1987, the Dow fell 508 points – losing nealry 22% of its value.
So, it should now be clear to everyone – even Phil Gramm – that there is a real recession going on in this country. But please, don’t panic. That will just make everything worse. Let’s see whether Congress and President Bush can come up with another compromise, or even if another compromise will prove to be necessary.
As for the 2008 Presidential campaign, it clearly benefits Obama, but I don’t think this will have too great an effect, since both McCain and Obama supported the deal. Most voters think Obama would do a better job of handling the economy, and that is likely in part responsible for his recent upswing in poll numbers. Obama is now up by 4 points in the Meaningless Popular vote (MPV) polls, and significantly ahead in the all-important electoral vote polls.
