Professor Elam

94 Democrats joined Republicans in defeating the 'bailout bill.' We have detailed the many problems in the  economy here the last few months.  Now the perfect storm of investment and commercial bank failures, election rhetoric, natural catastrophes are bringing a financial storm.

What worries me most is the possibility of a credit meltdown. Already banks are reluctant to loan to one another, something that routinely happens every day. What if a major corporation or government could not meet its payroll?  Panic would quickly ensue, there would be runs on banks, people coud not or would not pay bills fearing a loss of even more liquidity.

It is imperative that some confidence be restored. Last minute partisan remarks by Nancy Pelosi coupledwith a massive rejection of the plan by folks calling Congress tanked the plan.

This was the biggest one day drop ever in the stock market. All of this is foreshadowing a liquidity crisis. Interesting times indeed.