Urgent efforts to lash together a $700 billion rescue plan for the national economy broke apart Thursday night, hours after key lawmakers had declared they had reached a deal.Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sped to Capitol Hill to try to revive or rework the proposal that the administration says must be quickly approved by Congress to stave off economic disaster.
Congressional leaders were to meet with the economic chiefs into the night.
This bail out not being done yet wouldn't have been a big deal if not for a cascading series of screw ups. The markets have been very panicky for several weeks now. This week, in an effort to force the bailout through, the rhetoric heated up with calls of pending economic doom, culminating with the President's speech to the nation. If this deal gets done smoothly, the rhetoric isn't a problem. But now that the deal has collapsed, the panic is due to hit a feverish pitch when the markets open tomorrow. And the worst part about it is the panic will be a self fulfilled prophecy from Washington. They have no choice but to find a way to salvage this overnight because they made this deal appear to be the only way to save the economy.
Update
I decided that this post needed one more thought to be more complete. I hope that I'm wrong about how I think the markets will react in the morning. Things like financial panics only require a speck of dust around which to begin quickly crystallizing, though, and this looks like a ripe speck of dust.
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