10/30/2008 05:12 am ET Updated May 25, 2011

Waiting for the Deluge

Some brief thoughts on the failure of today's bail-out vote.

1) This represents a failure of leadership of a truly historical scale. Yes, the plan proposed was flawed, but the reasons for voting against it were even more flawed. With an election only five weeks away, what should have been a bipartisan effort to stave off a massive economic collapse instead imploded into a party political squabble. To a degree, both parties are to blame; the Republicans, however, have to take the lion's share of opprobrium here: it was their ideology that allowed the debt crisis to balloon so massively; and it was their unwillingness to compromise when it came time to voting that ultimately scuttled the bill.

In the end, Congress has done little more than fiddle while Rome burned. Or, worse, it has helped to fan the flames. There's an element of farce to the whole proceedings -- except an awful lot or ordinary people are going to get hit hard, very hard, by the economic fallout. The effects will range from rising inflation to a further constriction on credit, from much higher unemployment to much more unpredictable access to consumer goods.

2) In a parliamentary system such a calamitous breakdown of party leadership would result in the government resigning -- or, at the very least, the responsible ministers stepping down. That the House Republicans voted down a bill upon which Bush and Cheney, as well as McCain had pretty much staked the last shards of their credibility, represents a truly massive collapse in party unity.

In some ways, it's not only the economy that's now facing organ failure; it's also the GOP itself. Over the next few days we'll be seeing something approaching a civil war developing in the party. Whether it can be papered over until the election remains to be seen, but the bitterness generated by this vote will, in the long run, radically realign America's political spectrum.

3) Some bloggers on both the left and the right are calling today's vote a triumph of democracy. Maybe, but if democracy can only triumph by its leaders throwing themselves and their constituents off a cliff, then we've got a rather serious problem (and, yes, that's my British understatement at work). That most Americans are against a bailout is not in doubt; but I mean no offense when I say this is an extraordinarily complex crisis; and since most Americans don't have a degree in either economics, political science, international relations or psychology (all of which seem to be in play in the current mess), this doesn't seem to be the moment to embrace undiluted populism when it comes to voting on a rescue package for the world's biggest economy. That the bill was unpopular with constituents made it all the more vital that both the Democrats and the Republicans pony up votes for its passage. In failing to do so, the GOP might have temporarily claimed a populist mantle, but it has also unleashed a s**tstorm of problems that will, in all likelihood, hit constituents in the pocket within a matter of weeks. And my bet is they'll pay a heavy price at the polls for this stunt.

4) Global markets are so spooked right now that a day has become a long-time and three days a virtual eternity. By not returning to the table until at least Thursday, the House of Representatives risks unleashing a chain reaction of panic in markets across the globe. Sure, they'll ultimately work out a deal -- and likely claim credit for making it "better" than the original version of the bill -- but there's at least a chance that by then things will have spiraled so far out of control that the rescue package will no longer have even a fighting chance of stabilizing the markets. And since pretty much everyone says there's only one bullet in this gun, that's a hell of risk to take.

5) If there was any doubt that America's unrivaled global dominance was unraveling, today's events ought to make clear that we're entering a dramatic new chapter in history. There's a real risk here of power vacuums emerging suddenly and bloodily, with fights for the spoils of a crumbling hegemony breaking out with increasing frequency and intensity over the coming years. Global economic crises have a nasty habit of generating truly unpleasant national and international political movements.

So, on a day when stock portfolios shed $1.2 trillion, that's my two cents worth.

The Age of Affluence? Ah... it was good while it lasted.