bush and those wanting to railroad the bailout ASAP will try to say that if it is not done NOW the effects will be catastrophic. That, however, is not how the markets work.
How do I know? Well, I don't. Rather, I project a non-catastrophic outcome based on my experience as a day-trader; who has made money in the past 2 weeks, by the way...
Above all, markets like predictability. Simply talking about action is often as good and sometimes better than actual action. When there was no plan what-so-ever-- even bush's power grab-- there was a far greater probability for a catastrophic melt-down. But now that such a thing has been suggested the investment community will do it's damnedest to prevent a melt-down until a political plan is decided upon or carried out. The reason being, if a bush-like blank check for a trillion dollars gets injected into the markets any and everyone who knows what they're doing can get a piece...
A slow, reasoned, pragmatic approach is the best one to take in this situation. And it is one least likely to cause a melt-down. Because, as you might have noticed, many people deep in the financial community; especially academically, are terrified by the bush plan but agree something must be done and are glad the topic has come up. Any actions taken 'from the hip' will be far less predictable and therefore cause a lot more unrest among investors.
We need a plan for which the consequences have been thoroughly thought out and for which we can at least have a slight clue as to the effects on the system as a whole. Even if the effects of a proposed plan are good, if they are unpredictable, it could lead to disaster as people panic.
To get a bit off-topic. The reason I see this whole situation as having occurred is because people who didn't know how or didn't want to learn how to play the game instead decided to cheat the game. But what happens when you cheat the game is that the game and victory within it becomes meaningless.
I know the game, it's rules and how it's traditionally played very well. But the 'deregulation' group have been using politics to bypass the game and therefore cheat it. If you've ever played a computer game with god-mode you know that it gets very boring very quickly. And if you've cheated in an online game, I hope, you've realized that it destroys the game for those who follow the rules.
The game in this case is the markets. The players are everyone but it is not a game to everyone. To most people it represents their life. And those who have cheated the system that allows the game to run have destroyed the lives of those who rely on the system not for a game, but to live.
(Edit) Somebody mentioned that people who play the market like instability and this is true. There is, however, a limit to what is acceptable.
The market goes through a boom and bust cycle that looks like a sine wave that gently curves ever upward. This cycle happens regardless of all influences on the market. What outside factors can do to the cycle is effect the amplitude. Greedy people love it when the boom/bust cycle has a huge amplitude; as it is exhibiting right now.
If the environment for the market, the economy is too unstable, however, it will collapse. Just look at how 'successful' markets are in unstable countries and dictatorships...