The Bailout Is Dead

...and on fire, and stabbed. It's official, defeated in the House.

U.S. lawmakers rejected a $700 billion bailout plan for the financial industry in a shock vote that sent global markets sliding as the world credit crisis claimed more banks.

By a vote of 228-to-205 the House of Representatives rejected a compromise plan that would have allowed the Treasury Department to buy up toxic debt from struggling banks.

The plan's defeat sent U.S. stocks down sharply, with the Dow Jones industrial average briefly falling more than 700 points, its biggest intraday drop ever.

Shares had already been under pressure following sharp declines in Asian and European shares on fears the crisis was spreading. Global money markets remained frozen, even as central banks poured in cash in an attempt to boost liquidity.

At least for now the bailout is dead. Dow's off over 500. NASDAQ and S&P 500 are both down 6% and falling.

The Crash of '08 is here, and here there be dragons. We're off the map, kids.

Now the fun really begins.

Meanwhile, the Fed is pumping billions into the credit markets and not waiting for Congress to finish with the blaming and the hate and the stabbing and the fire.

Under one new step, the Fed will boost the amount of 84-day cash loans available to U.S. banks. The Fed is increasing the amount to $75 billion, up from the current $25 billion starting on Oct. 6. Banks bid on a slice of the loans at an auction.

That move will triple the supply of 84-day loans to $225 billion, from $75 billion, the Fed said.

Meanwhile, the Fed will continue to make $75 billion worth of shorter, 28-day loans available to banks.

All told, the total amount of cash loans -- 84-day and 28-day -- available to banks will double to $300 billion from $150 billion, the Fed said.

Moreover, the Fed made an extra $330 billion available to other central banks. That boosted to $620 billion the total amount available to the central bank through currency "swap" arrangements, where dollars are traded for their currencies. That total is up from $290 billion previously being made available through such arrangements.

And it's doing NOTHING. The LIBOR is at 5.24%, TED Spread at 3.37%. It's over. Hopefully the pain this causes will be an excellent motivator to come up with a REAL PLAN THAT WILL WORK.

Having said that, the GOP leadership is not blaming the GOP rank and file, they are blaming...Nancy Pelosi! (She was mean.) This keeps getting better.