Despite a majority of Republicans being against the bill, it passed by 263 – 171. $100bn in new tax breaks helped move enough Republicans (101 still voted against 91 in favour).
It also included tax breaks to help small businesses and to boost alternative energy, expanded the child tax credit and extended help to victims of recent hurricanes. (BBC News)
Has John McCain lost a beat by not opposing the Bush plan? 45% of people oppose the plan, though a similar number say they are confused by it. The mood however seems to have been blowing in the we need to do something, this is something, therefore we must do it, at least on Capitol Hill with the sweeteners above sealing the deal.
Further financial instability would have started hitting main street, with businesses unable to get credit for the next business transaction or investment to increase production. The question though is that the bill by a way to stabilise the economy without rewarding the mistakes made by the banks.
In Europe however the situation could potentially be worse. In the US 96 cents was lent for every dollar in deposits. In Europe the figures are 1.40 Euros lent for every 1 Euro (The Economist). The only thing we can say is that the worse is not over.
It has only began. This may not even work. In the long run we are all dead. Economists are not the sort of people to always look on the bright side of life. The only thing we can hope for is that this measure calms the markets, makes the bank loosen up and let credit flow again to ease the monetary system. It is bad enough with businesses lacking custom without their banks not providing finance for decisions, because of their bad loans and lack of funds.
Ultimately animal spirits of the movers and the shakers will decide if this measure succeeds or fails. With people flocking to Ireland with their savings with the government saying that it will guarantee all deposits made that reassurance needs to be global in nature.
It is time for governments of the world to show that globalisation is not just about the allocation of resources, but independent nation states working together on interdependent issues affecting the economy. A free for all could end up in being a free fall.
McCain ain’t Dead
Meanwhile I have been saying that Obama needs to get to 10% by mid October to be safe from McCain making up ground in the closing stages of the campaign. With Gallup having him up by 8% and Rasmussen by 6%. Over the economic meltdown Obama has pulled ahead while McCain has floundered. Would Obama have followed if McCain had attacked the Bush plan? He could have appealed to Democrat leaning voters who are against the bail out. That decision may well come back to haunt McCain, even if he consoles himself that he was doing the right thing for America.
While Obama is on his way to victory, if his camp are really claiming that it will be a landslide that is premature. Victory yes, but in the closing stages McCain will come back His support is underestimated while Obama’s is overstated – the only poll that counts will wither bear this out or not, the real question is by how much and whether McCain can come back in the final furlong.
With close states going to the current leader, Obama wins 353 to 185 in the electoral college that decides the Presidency (see blog linked below for explanation and how far this has moved from before the economic meltdown). However Obama has narrow leads in 85 of those votes. A 3% swing to McCain in those seats (well within margin of error) makes it 268 to 270 in McCains favour.
If Obama can keep Ohio worth (2.0% lead) worth 20 votes and Florida worth 27 votes (3% lead) then he will win. But calling it a landslide now is almost begging for my analysis to come and bite you in the ass. I want it to be true, but the numbers cannot be taken for granted. Just a 3% swing at the moment would out McCain in and that is so easily possible that if I was a Republican I would be making my base feel that they have to come out and fight while making Democrats feel they can stay at home in key states, it is a done deal.
Democrats need to be talking up the fight rather than being assured and complacent. It is there to be lost and will not take much. There is no prize for winning opinion polls and loosing the only poll that counts – the election. If McCain can get the Democrat controlled congress blamed for the current crisis …