UPDATE: This post was a bit premature, given the complete collapse at the end of the day. That said, we wouldn't have been surprised to see the market down 500+ points even without the bailout.
EARLIER: What have we learned from the events of the last hour? That the market doesn't think the $700 billion bailout will do much to fix the current situation. And, possibly, that the market thinks the situation will heal itself on its own--or that the Feds will now come up with something better.
What's happened in the past hour?
- The House blocked the Bailout Bill (a big surprise)
- The market plunged 400 points from where it had been trading
- The market then recovered, and is now down only about 200 points from where it was trading prior to the House announcement.
This suggests that the current Bailout itself was worth only about 200 DOW points in the market's eyes.
And it's not just the DOW: The credit markets haven't moved much, either.
This morning, when it seemed the bailout would sail through Congress, the TED Spread spiked up from Friday's already elevated levels (the opposite of what it would have done if banks had viewed the Bailout as a fix). And now that the Bailout has been voted down, the TED Spread is up only modestly from its levels an hour or so ago. In other words, the market yawned.
Of course, maybe we're just going to have a delayed reaction. There are 85 minutes left in the trading day. Still time for an honest-to-God crash.
See Also: House Blocks Bailout Bill
