Krugman nails it again:
[O]ne non-rank-and-file Republican, Senator John McCain, is apparently playing spoiler. Earlier this week, while refusing to say whether he supported the Paulson plan, he claimed not to have had a chance to read it; the plan is all of three pages long. Then he inserted himself into the delicate negotiations over the Congressional plan, insisting on a White House meeting at which he reportedly said little — but during which consensus collapsed.If you need convincing that all of this matters, see this. The key point left open is:
... placing everyone who depends on credit under strain.The bursting of the housing bubble has strongly deflated housing prices. The deleveraging of financial institutions and the parallel flight of credit to T bills is how deflation spreads throughout the economy.