Will this be Black Friday, as last Friday almost was?
With the financial bailout package still undefined and House Republicans, in particular, opposed to the present draft, financial markets almost certainly will fall during the day. How far they fall, and for how long, will depend on White House-congressional progress toward a package which can pass and President Bush can sign.
WaMu's failure Thursday was no surprise. Many, including myself, had predicted it for weeks. But few in Seattle were prepared for the reality of it when it came. Other weak institutions could follow.
Things to watch:
Many analysts and economists have pointed out gaping holes in the Paulson-Bernanke plan that remains at the center of discussion. The central unresolved point: What will taxpayers get in return for their $700 billion bailout of the industry?
Will Sens. John McCain and Barack Obama participate constructively in bailout discussions? McCain, at this point, is being painted a spoiler by Democratic critics for flying back to the capital, joining House Republicans in their criticism of the package, and thus far refusing to debate Obama tonight in Mississippi unless the package is first resolved. Obama, thus far, has mainly been a spectator in discussions but almost surely will sharpen his criticism of McCain's role today. This is, in particular, a defining political moment for McCain. He can come away from this as a spoiler who helped bring down financial markets. Or he could end up as a hero who saved taxpayers from an expensive fiasco engineered by bureacrats and politicos.
Will discussions take a constructive turn today? Or will mutual recriminations dominate the news? All parties need to make this a constructive day. If not, this truly could be Black Friday as global investors conclude that we can't get important business done, even in a crisis.