'Emergency Economic Stabilization Act of 2008' is voted down; Dow immediately drops 700 points . . .

. . . Dow is down 500 at the moment

As I write this the American congress is voting down a revised and expanded version of the Paulson Plan. A 110-page version of the bill they are voting on is available here. (I don't know if it is the exact bill they are voting on.) By and large, the Democrats are supporting it and the Republicans are not. I find this to be further evidence that the Republicans have become a populist party, while the Democrats are much more a Wall Street party. Things have changed.

Where does the bill go from here? I am convinced we are living through a financial collapse that the American government should help solve. But should the Paulson Plan be the attempt to solve it? My reading of the bill raised more questions than answers. For example, Sec 103 says:

In exercising the authorities granted in this Act, the Secretary shall take into consideration --

(1) protecting the interests of taxpayers by maximizing overall returns and minimizing the impact on the national debt;

(2) providing stability and preventing disruption to financial markets in order to limit the impact on the economy and protect American jobs, savings, and retirement security; . . . .

The bill does not make clear, however, how the Treasury could actually balance these two considerations. Can the Treasury sufficiently re-capitalize the banks without paying higher than market prices for the "troubled assets"? On the other hand, are they protecting taxpayers if they do pay higher than market prices?

In sum, my response after a quick reading of the bill is that I am unconvinced that the government can balance these two considerations. In trying to do both, they might fail to do either. I think my preferred bill would put one consideration over the other.