Wall Street bail-out binned

It was quite the surprise to wake up this morning and find that the Lower House of Representatives in the US Congress had voted against the proposed bank bail-out plan. The fact that it looks like it was because some Republican Congressmen threw their toys because they didn’t like Nancy Pelosi’s speech seems rather infantile given what is at stake. And the markets reacted as you’d expect. Now, it looks like the bail-out will be tweaked and it will go to a re-vote, but who really knows what will happen. At a personal level, I’m glad that Pelosi’s speech emphasised the importance of transparency and accountability. One of my growing concerns about the initial proposed plan was just how much power was vested in Paulson”s hands – who was accountable to no-one at that point.

It is a sweet irony to me that those who are against this bail-out are the staunch Republicans who deem this state interference in the market to be as bad as communism. They are comparatively un-evolved when it comes to their Republican cousins in the upper echelons of power who dreamed up the strategy of privateers taking all of the profits and offloading all risk and debt to the taxpayer.

I imagine that the wrangling over this matter will continue. In the meantime, there are several bank failures to mull over – and they are failures in that they cannot survive without state takeover or state legislation being over-ridden in order for takeovers to take place, takeovers which would fall foul of monopoly regulations in other times. This includes Wachovia in the USA, Bradford & Bingley in the UK and several European banks including Fortis. Wachovia is an interesting case for NZers. It  owns the entire South Island electricity grid and the Green Party here are calling for the assets to be bought back when the resources of Wachovia are rationalised.

And as a related sidenote, ne of the most popular articles on the Guardian website at the weekend was John’s Gray’s piece on the possible end of the USA economic empire – I thought it was a fascinating piece and posted a link to it on twitter. And here is a great piece on the Sarah Palin phenomenon too – top writing.