By now I am sure most of you have heard that the $700 billion bailout bill failed to pass the House of Representatives. Probably everyone’s portfolios took a hit today, but I think that is temporary and the markets will recover eventually. Right now, the Republicans are blaming Nancy Pelosi for a highly partisan finger pointing speech she made to the House that made some House Republicans vote against the bill. Even though her speech was quite inflammatory, I don’t think that’s the reason why so many Democrats also voted against the bill. I think many of these congressional members voted against the bill because of self preservation, and some of them really grew a backbone and shrugged off the fear being marketed by Paulson and the rest.

We are obviously in some tough economic times, and whenever there is disaster there is an inherent sense of self preservation. For the members of congress, all 435 of them are up for reelection in 38 days. Guess what? They want to keep their jobs and they are getting a deluge of pissed off emails and phone calls from their constituents to stop the bill. According to BusinessWeek, “in many Congressional offices, the phone calls and mail against the Paulson package is running 100 to 1 against the plan”. Voting for the bailout bill now is a very unpopular thing to do for a politician so most of them actually chose to listen to the people they represent. That is rather refreshing, but I think understandably it is out of self preservation since neither the Democrats or Republicans can afford to lose seats in congress right now.

Besides politics, this entire bill is based on the fear that there will be a total and complete meltdown of everything if it isn’t passed. I am very familiar with the idea of selling fear since I work in a security software company. When you try to sell anything related to security, you have to tell your potential buyer the worst things that could possibly happen if they don’t buy your system. That’s just good marketing, but once a company buys a security system, it is still up to them to implement it and roll out best practices all over the firm to get the best results. I think this $700 billion bill is marketed in the same way with a lot of fear mongering. There is so much panic and uncertainty in the air now and Paulson and Bernanke were simply pouring fuel on the fire in order to reach their agenda of passing the bill. However, even if the bill were passed it wouldn’t be a magical pill. If the same fools that created this mess are still in charge of the money and do not change their processes, then nothing good will come of it. It would be like a company that buys our software for a million dollars and just let it sit there and waste away.

So even though I am poorer today, I am glad that this bill as it is now has been defeated and more discussion will be done. I think ultimately many congressional members feared losing their jobs more than a total financial meltdown. In fact, right now there areto throw out all of . Even without this bill, we are seeing market forces at work and small inklings that things will be okay. The stronger firms are swallowing up the weaker firms and becoming stronger, and the Federal Reserve just keeps on injecting money into the system anyway. I really think that the market overreacted today to this vote because as I have said, even if it were passed, there is no guarantee that a simple infusion of money would fix everything. It is up to those in power to implement a new process to prevent something like this to happen again. That takes time and careful planning, not a piece of legislation that’s hastily slapped together and pushed through with fear.

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