Where will this end?

There are few events that can break through the conference bubble but the failure of the $700bn bailout has undoubtedly been one of them. Most worryingly, no one knows what happens next.

In Washington, the bailout seems doomed. It was never politically popular to begin with and neither the Democrats nor the Republicans will want to cop the flak for passing it. It says something about President Bush’s lack of political authority these days that not only did House Republicans vote the bill down but only four of the Texas delegation voted for the bill. Indeed, politically it is hard to see what upside there is to voting for the bill.

Folk on the right, including myself, have not been keen on the bailout proposals. But something needs to be done. As the Wall Street Journal Europe puts it this morning,

“Moral hazard was yesterday’s problem; today it’s all about saving the financial markets.