The $700 billion is to appease foreign investors?

I said in August that I thought powerful foreign creditors would refuse to be cheated, and now Karl Denninger tells us that the $700 billion bailout is to compensate these parties.

And that probably doesn't mean us Brits, either.

More from iTulip

Eric Janszen gives us his take on the brouhaha:

This iTulip post describes the process whereby the current deflation may suddenly turn into inflation.

This one warns against Bill-bashing for its own sake, which may be cutting off your nose to spite your face - something must be done, he says, because the market does NOT self-correct. I would suggest that it might, if the government and banks hadn't "intervened" long ago to create a fiat currency. Once that's happened, we're playing the game for the benefit of bankers and politicians, and by their rules.

And the solution?

Anyone who saw Brian Cox as Titus Andronicus at the Swan in Stratford in 1987, can never forget it. I remember seeing a girl in the audience with her mouth hanging open, paralysed, as Titus stunned us with his almost gloating description of his suffering. And what a master Shakespeare was, understanding that when emotion is heightened, it is also complex.

TITUS Ha, ha, ha!

MARCUS Why dost thou laugh? It fits not with this hour.

TITUS Why, I have not another tear to shed.

Humour can also unblock the mind to work creatively in a disaster. But there is also the "We're doomed, I tell ye!" John Laurie type who only cheers up when it's as bad as he always said it would be. Watch out for them, because unconsciously, they may steer events to match their temper.

iTulip explains succinctly, below, the problem caused by the house price crash. For me, though, it's a reminder of how wonderful the old cartoons are.

Boing!

Dow and FTSE back up again. Thought so. But unlike 1987, I don't think this will be over by Christmas. Bear market rally, don'tcha know?

Super post by Denninger today, too. He points out, among other things, that the Dow started falling yesterday when everyone (himself included) expected the Bill to pass. And as he says, Bernanke upped the money in the system by vast amounts anyway, and it still hasn't fixed the problem. Just how much petrol do you need to throw onto a fire to put it out?

The BBC perspective

After yesterday's "No!" in Congress, BBC "business editor" Robert Peston refers to a "breakdown in the US political system."

To me, it's the very opposite: it's a prewar Lagonda that has spent years with its axles on bricks, and it's just had a new set of tyres put on; after long disuse, the engine has finally turned over. Maybe it will seize up again, but for now there is a hint of democratic accountability.

For example, is it not interesting that more Democrats voted against the Bill, than Republicans for (both as a percentage and in absolute numbers)?

I watched Peston on TV last night and said to my wife, "I should be in front of that microphone." I heard him on the radio this morning and still want his job.

The MSM: one despairs.

Horton heard a Who

Congress just heard from the voters. Let's hope Horton listens closely.

Now what?

Maybe I'm not that good at body language, though I've spent years with unstable children; and maybe it's having to speak to a semicircular audience of journalists outside the White House, and he hasn't learned the actor's trick of seeming to direct his attention steadily to one indeterminable member of the audience; but Hank Paulson's statement made just now (c. 21.45 British Summer Time), with the left-middle-right upanddown movement of his head, and the earnestness of his mouth and lips, makes him look panicky.

But maybe the worst players in the banking market should be allowed to burn out anyway, as Marc Faber has said for a long time.

How many of the crucial 10 swing votes in the House were down to the polemical fax-fomenting of Mish, Denninger at al?

And will the Establishment force them to vote again and again until they get it right? Nancy Pelosi and her "bipartisan" mantra (3 or 4 times in one statement) seemed to hint at this.