With today's snapback, the Dow lost 777 and regained 485.
As of this evening, Intrade says the probability of a bailout bill passing by Oct 31st is 85%.
(777-485)/(1-.85) = 1,946. So a bailout bill makes an expected difference of 2000 points on the Dow.
Of course this is a bogus calculation, but it's an interesting one. Not overwhelmingly on-topic for OB, but it involves prediction markets and I didn't see anyone else pointing it out. I hope the bailout fails decisively, so this calculation can be tested.
PS: Bryan Caplan understands Bayes's Rule: It's not possible for both A and ~A to be evidence in favor of B. So which of the two possibilities, "unemployment stays under 8% following a bailout" and "unemployment goes over 8% following a bailout", is evidence for the proposition "the bailout was necessary to prevent economic catastrophe", and which is evidence against? Take your stand now; afterward is too late for us to trust your reasoning.
Your calculation neglects the issue of timeliness. You assume that all the expected damage to firm profitability took place as a result of the movement of p(passage by Oct 31) from 1 to 0.85.
I don't think that this is the relevant event. The flow of credit is frozen now, and every day that this blockage remains in place causes further damage to the Economy and increases the odds of a Keynesian Death Spiral.
The bailout's defeat shifted p(Passage in the next few days) from something pretty high to 0, while decreasing p(passage by Oct 31) by a little. In my view, the markets were primarily reacting to the former adjustment.