Will Pelosi's second attempt at a bailout include ACORN? Update: Dow loses 777 points, more than on 9/11; Update: $1.1 trillion in market value lost

Why not? She tried a bipartisan bill and got nothing for it. What’s stopping her from turning it into a Christmas tree for the left and passing it on a strict party-line vote? Bush will sign it regardless and Senate Republicans will be under tremendous pressure to decline a filibuster with the Dow down 600 points today and god knows where tomorrow. This is the flaw in the “if the majority thinks it’s so important, let them pass it” approach: They will pass it, on their terms, and they’ll point to Republicans like Gingrich and Paul Ryan and the Journal — and Paulson and Bernanke, of course — who’ve acknowledged this is an emergency to take credit for rescuing the economy. All they have to do is wait a few days until the public’s good and terrified and the polls on the bailout start to reverse. They’re reversing already.

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A number of Republican House members and staff, along with others who are plugged in, are telling me that Nancy Pelosi and the Democrats will come back with a new bill that includes all the left-wing stuff that was scrubbed from the bill that was defeated today in the House.

As this scenario goes, the House Democrats need 218 votes, and they have to pick up a number of black and Hispanic House members who jumped ship because the Wall Street provisions, in their view, were too benign. So things like the bankruptcy judges setting mortgage terms and rates, the ACORN slush-fund spending, the union proxy for corporate boards, stricter limits on executive compensation, and much larger equity ownership of selling banks through warrants will all find itself back in the new bill. Of course, this scenario will lose more Republican votes. But insiders tell me President Bush will take Secretary Paulson’s advice and sign that kind of legislation.

House Republicans weren’t willing to swallow a bitter pill today so they’ll swallow a more bitter pill later this week. And guess what? They’ll still get killed at the polls in November. Bill Kristol thinks McCain’s only chance now is to stop campaigning (again) and come back to D.C. to try to drive through a compromise. If he succeeds, it’ll prove his leadership and calm the markets. I don’t see how he’s supposed to pull that off, though, when the entire Democratic leadership will be primed to whine about how he’s only making things worse by being there, is ruining delicate negotiations, etc. If Kristol’s serious about solving the crisis and willing to sacrifice electoral gain to do so, there’s an easy compromise solution: Have McCain and Obama do some sort of joint appearance, maybe a presser, urging support for a bailout. That’ll swing public opinion sufficiently to remove the political incentives to voting no and give Pelosi the 10 votes she needs to pass it now. There’s no gain for McCain at the polls in doing so, admittedly, but he’s the guy who preaches “country first.” Here’s his chance.

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Update: This is day one.

The Dow closed the day down 777.68 points, or 6.89 percent, beating its previous record for an intraday drop of 721.56 points, set during the first trading day after the Sept. 11, 2001, terror attacks. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.

“This is panic, and fear is running amok,” one trader told CNBC. “We are in a classic financial meltdown, and it’s panic-based. We’re seeing panic selling.”

Update: The wealth lost today on the market — just today — exceeds the cost of the bailout considerably.

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