Well, it looks like the US Congress is close to agreeing a $700bn bailout package for the banking system - provided the White House agrees. Given that Bush went on the TV yesterday to say that the US banking system would collapse unless there was a deal, it would look bizarre, to say the least, if he turned the package down. So it's probably going through.
Many politicians in Congress - both Democrat and Republican - were severely critical of the initial Paulson/Bernanke bailout plan, which proposed sweeping powers for the US Treasury to administer the $700bn fund. In particular, the Treasury wanted complete discretion to acquire assets as it saw fit, and very limited oversight - twice-yearly reports to Congress. Also, in the original plan there was no provision for the US Government to take an equity stake in firms that received bailout money - so unless the bailout fund can sell off its book of bad loans at a higher price than it pays the banks for them, the US taxpayer was facing very big losses under the original scheme. The problem is that the lower the price the bailout fund pays for the bad debts, the less effective the bailout is likely to be in boosting confidence. Paul Krugman's blog has a really good explanation of why the numbers don't add up on this original version of the bailout plan.
So what's the difference with the new plan? There are provisions to cap executive remuneration in firms which receive bailout money - which should make the plan more popular with the public - but as far as I can tell based on the limited information available so far, the revised plan doesn't include provisions to take equity stakes in the assisted firms. So far I have been unable to find out what is on offer in terms of additional oversight.
Really, given the rushed manner in which this has been done, how can anybody be sure (or even have a reasonable degree of belief) that this plan is going to work? Undoubtedly there was a strong case for drastic action, but it needs to be credible and effective action rather than something half-baked. This whole thing feels like it's being bounced through with Bush and the US Treasury holding a metaphorical gun to Congress's head - saying "pass this law or we'll blame you for the collapse of the global financial system".
Whilst I'm sure that if there is a deal in the next 24 hours or so it will be trumpeted with a big fanfare, and stock markets will rise for a day or two, as the hangover sets in we may well find that we aren't in a much better position than we were before the plan was hatched. Except that US taxpayers will be several hundred billion dollars worse off.
And what happens after that?