Bailing on the bailout, or something

I'm not really sure what to think of what's going on with this whole bailout thing.

First of all, and rather importantly, Paulson and his crew have not spelled out just what the real danger is, so it's hard to know how important it is that something get done RIGHT NOW. Clearly, financial markets struggle under the veil of uncertainty, and as we saw last week, sometimes the mere insinuation that the government is planning to help calms things down, so there may well be value in some action.

Secondly, however, the Paulson plan is clearly DOA. No one wants to give him (and, really, his successor) $700 billion (a number they pulled out of their collective behinds, BTW) with no oversight of any kind. Thankfully, even der Chimpenfuhrer has acknowledged that, and the plan that Dodd was talking about yesterday as "an agreement on principles" was, apparently noticeably different.

Thirdly, however again, we don't have the details of Dodd's plan (or whatever the compromise plan is looking like). So everyone is still reacting to Paulson's crappy plan, and there is no effort to sell us on why the compromise is not just a better idea, but actually a *good* idea.

Fourthly, in comes Saint JohnnyMac and his House GOP cronies. They have put together a "plan" which is more laughable than the Paulson one. It includes, as you would expect from crazy people, reducing regulations and cutting corporate taxes. The assumption, of course, is that if the government just got totally out of their way, companies would assume these bad debts their own bad selves and somehow figure out how to make money on them. Yes, that will work. That's why when the government was begging banks to come up with funding for AIG (I think it was AIG, I'm getting confused with all the failures) they said no way.

So, here's where we are. There are three plans, two of which are laughably bad and dangerous and one which may be better (and on which everyone except the House GOP had signed off, basically) but we don't know what it is. W has no authority of any kind (his party is in absolute revolt), McCain is clearly trying to use this to somehow gain popularity as the man who fixed the problem, and meanwhile, overnight WaMu went belly-up.

I can see the following scenarios taking place:

1) The Dems give in and sign off on the House GOP plan (or the Paulson one), either of which would be a disaster. I don't think that will happen, in part because they've got the bit in their teeth somewhat (Barney Frank is goin' ape) and in part because this is like the only time they've ever gotten Bush to give in on anything (other than SSI, and that one he just pouted on) and they can't let him forget it.

2) Nothing passes, and the markets self-correct. McCain looks like a genius for stalling everything and being terribly non-commital.

3) Nothing passes, and the markets and banking industry continues to go down the toilet. If this happens, McCain's candidacy is doomed beyond comprehension, because everyone will remember how close they were to a compromise (for good or ill) and then it died.

4) Somehow, a plan that doesn't entirely suck gets passed - the banks get a couple hundred billion (but not 700) and regulations get increased and homeowners get something back in return.

Of course, I have no idea what will actually happen, and now I have to go to work.