The price of oil jumped 25 dollars on speculation that democrats would give into republicans and pay 700 billion dollars to continue the recession.
Make no mistake. This plan is like every single other Bush plan. It will hurt the economy and leave us all worse off.
What will happen if democrats stand firm and do nothing at all?
Lets say credit markets freeze. Which they probably wont.
All the people living off credit cards go bankrupt, but what does that mean exactly? It means that they arent spending a significant chunk of their paychecks on credit cards and now that money is going away from the financial sector and into the rest of the economy.
Same with the people foreclosed on. They don't stop spending. They stop spending on financial institutions.
So financial companies do enter a depression level era. But the rest of the economy rebounds and those financial people get new jobs elsewhere.
So what happens if we do bail out these financial institutions?
The price of basic commodities skyrocket as these institutions buy into them in a recession making the recession worse.
We make a recession longer and more protracted.
Bush has never made a good decision for the economy in his presidency. This isn't breaking that trend.