Did the Monday Stock Market Crash Ensure Passage of a Revised Bailout Plan?
As Washington toiled to come together to create a workable $700 billion dollar bailout bill this past weekend, many Americans voiced their firm opposition to the plan. Many people questioned "why they should bailout out the corporate fatcats" and said that "letting a few banks fail" was a much better option than agreeing to the $700 billion dollar bailout plan. After coming to an agreement on the bailout over the weekend, lawmakers were stunned when the bill didn't pass the House of Representatives. The bill was extremely unpopular with the American public, with many participating in letter-writing campaigns, urging politicians to vote no to the bailout bill.
A funny thing happened though. The stock market tanked on Monday, shedding over a trillion dollars in value just in the United States alone. Many Americans had watched as their homes declined in value over the past few years, and now they were watching as their 401ks took a substantial haircut. Doom and gloom invaded the mainstream media, with many publications wondering if this was in fact the beginning of the second Great Depression.
The American pubic's view of the proposed $700 billion dollar bailout plan had suddenly changed. According to an article in Bloomberg, many politicians were now being inundated with emails and phone calls, pleading for them to pass some type of a bailout bill. We're losing our shirts, they said. You have to push some sort of bailout through Congress.
Some politicians reported that as many as 90% of the calls and emails that they received prior to Monday were against the bailout. After the crash on Monday, there was suddenly much more support for the $700 billion dollar plan, with some politicians claiming that 70-75%+ of the calls and emails were suddenly in favor of the bailout. Not surprisingly, this caused some of the House members to "reconsider" their stance. This is the main reason why many politicians in Washington believe that a revised bailout plan will be passed sooner rather than later. As soon as people started to panic (which is exactly what happened on Monday), suddenly the $700 billion dollar bailout plan didn't seem so bad.
Some were speculating that the resurgent market on Tuesday was due to the fact that the "markets didn't really need the bailout and that we would be fine without it". This is false - the reason is that the passage of a bailout plan was much more likely after Monday. Many people changed their minds about the plan as soon as they starting losing real money.
Many Americans are very close to retirement age and can't cope with the thought of their nesteggs declining severely in value over the next few years. Great Depression II? Not a chance. The bailout plan will pass, and it will pass due to the plunge in the markets (and ensuing panic) on Monday.
Source: House Members Receive Angry Calls on Vote, Aides Say
Filed under: The Economic Meltdown | General Market News