Another look outside my bubble

I've been reading some of the news lately and I saw that the US House voted against the bailout package. I knew that people didn't necessarily like it - some didn't like it because it was a vague plan, some didn't like it because they felt the money shouldn't go to the people who made the mess in the first place, and some didn't like it because they thought it was the first step on the road to socialism. And of course we can't ignore the fact that all of this is happening when there's an election a few weeks away so there's all sorts of political crap involved that wouldn't be there at another time. For whatever reason, the bill was defeated. As a result, the Dow tanked in its greatest point drop ever.

No one can really say what's going to happen now. Maybe the bill will come forward again, and maybe it won't. What happens if another major financial institution in the US files for bankruptcy? How far away is the US economy from a Depression? What about the rest of the world - money and banking are global now? I thought I read that banks aren't lending as much right now... what would happen if banks stopped lending money to each other or businesses?

And what's going on in Europe? Banks are collapsing there, too. How often do banks normally collapse - is it happening more often than usual?

In some ways I feel like I'm living in an Ayn Rand novel. Even the new conditions under which the mortgages were to be loaned could have come right out of Atlas Shrugged , as could many individual's reaction to the bill. Not that I always subscribe to the theories in the books (there's an implicit assumption that the people who are the most industrious have an internal sense of responsibility - but there's no room for, say, sociopaths), but it's kind of strange to see things happening as though they came out of a book. And scary, too, because in that book the entire economy and society collapsed. I hope that this doesn't happen here.

In any case, like many people, I'm watching what's happening with the US economy very closely.