Blue Monday.

“‘The fact is people are scared and the only thing they’re doing is selling,’ said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. ‘Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working.‘” And on the first Monday of that October, the Dow plunged 800 points…I know I spend more time than most contemplating the 1920’s, but I can’t be the only person out there for whom this is all starting to sound eerily familiar…

Update: Hold those dismal historical analogies just yet: Thankfully for everyone, the rally monkey roared at the end of the day, bringing today’s losses to only 370 or so. Still, it’s safe to say things are looking a tad, er, erratic on Wall Street at the moment.

Sinking beneath the Wave.

“‘If you turn the clock back two or two and half weeks, you could make a plausible argument that if a couple of things go our way we will lose three to four Senate races,’ said one Republican strategist. ‘Now we will lose six to eight.’” Reeling from both the economic collapse on Wall St. and the ensuing shenanigans surrounding the bailout — which passed on its second try yesterday, despite continued opposition from a majority of the House GOP — the Republicans prepare to be ousted en masse in a month. “Polling in most Senate races over the past 14 days has shown a five-point decline for the Republican candidate, the strategist said.“

Update: “‘Before the economic crisis, we had a number of races moving our way,’ said Matthew Miller, communications director of the Democratic Senatorial Campaign Committee. ‘But now we’re seeing Republican numbers plummet.’ GOP officials largely agree. ” Is 60 in the Senate now in sight?

Bailout, or we all sink.

“‘Today’s the decision day. I wish it weren’t the case,’ said Rep. Barney Frank (D-Mass.).” Despite the apparent attempt by divider-not-a-uniter John McCain to kill a compromise he hadn’t even read last week, the Dubya White House and Congress hold their respective noses and come to agreement on Paulson’s $700 billion bailout plan, with debate in the House starting today. “The proposed legislation would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates. The plan would give Paulson broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them.“

As I said here, I’m not all that happy about the nation having to subsume the risk, and ride to the rescue of, the many banks and Wall Street types that profited massively from these obviously suspect mortgage deals. But, what else is there to do? As with so much else occurring over the past eight years, it befalls us now to clean up the mess left by the free market fundies of late. I just hope we learn something from the economic consequences of this latest binge of free-market fraudulence, before they grow too dire. To wit, whatever the corporate-funded right tells you about self-regulating markets, we need, and will continue to need, real refs on the field.

Update: Uh oh. The bailout compromise dies in the House, prompting the Dow Jones to swiftly tank 700 points. “The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against.“

As the TIME article linked above noted before the vote, “the candidate with the most riding on Monday’s vote is McCain, who backed the concerns of conservatives in the House over the initial agreement…[I]f a majority of the House Republicans don’t vote for the measure, McCain could lose political face. ‘If McCain cannot persuade them, it is hard to portray him as a leader,’ said Clyde Wilcox, a political science professor at Georgetown University.” So, that’s the silver lining, I guess. But the bad news now, alas, is considerably worse.

Suspension of Disbelief.

“I am confident that before the markets open on Monday we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people. All we must do to achieve this is temporarily set politics aside, and I am committed to doing so.” Uh, but I thought the fundamentals of our economy were strong! Apparently now cognizant of our recent economic travails, John McCain announces he’s temporarily suspending his campaign to focus on the Wall Street bailout, and has asked for Friday’s foreign policy debate to be delayed.

If we learned anything from the Palin debacle, it’s that the mythical maverick isn’t above pulling a ridiculous and transparent stunt when he’s starting to sweat the polls. Well, here we go again. Update: Sez Obama, the debate is on. Damn right.

We are all “Socialists” now.

“Let’s be clear about why we’re facing a crisis that could pull down the global financial system. The irresponsibility of individuals who bought houses they couldn’t quite afford pales in comparison with the irresponsibility of the financial wizards who built on those shaky mortgages a towering edifice of irrational faith. Someone in the government should have looked at all those trillions of dollars’ worth of mortgage-backed securities and collateralized debt obligations and credit default swaps and demanded that Wall Street prove that all, or even most, of this purported money was real. But we’re in the eighth year of the Bush administration; adult supervision left the building long ago.” — Eugene Robinson.

Boy, nothing like panic and near-catastrophe in the banking and financial sectors to turn all the stark raving free-market fundies redder than Eugene Debs on May Day, eh? In any event, once again we’re on the verge of learning the hard way that Wall Street does a really lousy job of regulating itself, and that, when push comes to shove, it’s the “don’t-tread-on-me” entrepreneurial capitalists among us who are the first to beg for Big Guvmint to come in and bail them out — at above-market prices. “The only emergency is on Wall Street, and that is entirely of Wall Street’s making. It was the banks that made the loans, the banks that bought the paper, the banks that dumbly believed the models that said that housing prices wouldn’t collapse…How touching to see executives from the likes of Lehman Brothers, not normally an institution associated with widows and orphans, squawk about cutthroat tactics.” And I don’t seem to remember the economic Big Boys, or their mostly-GOP minions in Congress, show such concern about the vagaries of risk when the plight of ordinary folks was being discussed, vis a vis the egregious bankruptcy bill of 2005.

Of course, we can’t just let many of our major financial institutions implode without consequence, and — even though delegating the Dubya administration any more “emergency powers” at this point seems like a colossally bad idea — it seems a given that something will have to be done to sort out all this out, and it will no doubt end up costing taxpayers and aggrieved homeowners a bundle. I just hope, when the dust settles, we remember this time how this all came about, and not just let the idiotic free-market fundies blather on about tax-and-spend liberals killing the entrepreneurial spirit every time some sort of regulatory apparatus is discussed in Washington. We know how that movie ends.

Shattered Glass.

“The Glass-Steagall Act is the Depression-era law that separated commercial and investment banking. It was functionally repealed in 1998, when Travelers (the parent company of Salomon Smith Barney) acquired Citicorp. And it was officially repealed in 1999. But recent events on Wall Street — the failure or sale of three of the five largest independent investment banks — have effectively turned back the clock to the 1920s, when investment banks and commercial banks cohabited under the same corporate umbrella.” As Wall Street takes a dive in the wake of several bank failures and near-failures — but, don’t worry, the fundamentals of the economy are strong and everything — Newsweek‘s Daniel Gross briefly discusses the end of the Glass-Steagal era, and what it means for the American economy.

Straw Man Economics.

“So you’ve managed to create AAA and BBB securities out of a pile of stinky, risky mortgage loans. Boss, you are a genius.” By way of Web Goddess, the Subprime mortgage fiasco, explained with profane stick figures.

Ok, ok, we need oversight.

“‘Our current regulatory structure was not built to address the modern financial system with its diversity of market participants, innovation, complexity of financial instruments, convergence of financial intermediaries and trading platforms, global integration and interconnectedness among financial institutions, investors and markets,’ Paulson said this morning.” Stick a fork in free market fundamentalism: In light of recent economic events, Dubya Secretary of the Treasury Henry Paulson proposes a massive overhaul of the nation’s regulatory apparatus. The plan, which among other things bolsters the powers of the Fed and phases out the SEC, isn’t getting the most favorable reception from Dems thus far. Said Chris Dodd: “Regrettably, the Administration’s blueprint, while deserving of careful consideration, would do little if anything to alleviate the current crisis — which was brought on by a failure of will.” Still, with even Team Dubya and its allies signing off on the need for it, regulatory reform of Wall Street and financial markets looks to be on the table to stay, one way or another.

Kuttner: He’s the real deal.

“Barack Obama’s speech on the financial crisis was a remarkable breakthrough…I wish I had written the speech. It is this kind of leadership and truth-telling that is the predicate for the shift in public opinion required to produce legislative change. A radical, appropriately nuanced, and deeply public-minded description of what has occurred, the speech was Roosevelt quality: the president as teacher-in-chief.“

The American Prospect‘s Robert Kuttner praises Obama’s economics speech of yesterday, and calls out Paul Krugman for his blatant partisanship: “Unlike some of my friends, I have not fallen in love with Obama…But Krugman, ordinarily an ornament of fair-minded progressive economics commentary, writes almost as if he has become part of the Clinton campaign. His latest characterization of Obama’s proposals in commenting on the New York speech — ‘cautious and relatively orthodox‘ — was preposterous.“

The New Deal fights on.

“Despite sustained efforts to tear down the New Deal — from the repeal of the Glass-Steagall Act in 1999 to President George W. Bush’s ill-fated 2005 efforts to dismantle Social Security — the 1930s-vintage infrastructure has proved remarkably durable…Although the Tennessee Valley Authority has yet to pitch in, four 70-year-old agencies are helping to cushion the blow of the housing bust. Let’s count them.” Slate‘s Daniel Gross examines how the New Deal is working to mitigate today’s credit crisis. (He also has a funny line about Sen. Clinton’s bizarre call yesterday to have Greenspan wave a magic wand to fix things: This “is a little like Chicago appointing a cow to a panel on preventing disastrous fires.“)