So what happens now?

As a friend notes, the longer they wait, the busier the FDIC gets.  This, I must point out, also costs the US taxpayer money, and there's no chance we'll get any of it back, either.

A journalist friend who spends way more time on politics than I do suggests that if the Democrats cave and include a capital gains tax, it will probably pass--but puts the odds of the Democrats caving at slim to none, since they can now blame any resulting crash on the Republicans.

I didn't think it was possible to be more disgusted with politicians than I usually am, but I find it impossible to express the seething contempt that I feel at this kind of opportunism.  I don't mind when they screw with the normal operation of the economy for venal personal gain.  But risking a recession in order to get a cut in the capital gains tax?  Letting it tank because you can always blame it on the Republicans?

I am grimly reminded of H.L. Mencken's famous observation that Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

The public doesn't quite grasp what's at stake, and there's no reason they should.  But the representatives do.  The true believers--well, I forgive them their zealotry, and hope that they're right and I'm wrong.  But anyone who tanks a bank bailout they think might be needed, in order to get a cut in the capital gains tax, deserves to be tried for treason.