By David Callaway, MarketWatch

Last update: 5:21 p.m. EDT Sept. 29, 2008

SAN FRANCISCO (MarketWatch) -- Congress called Wall Street's bluff Monday, and investors, savers, retirees and employees around the world lost their shirts.

While groups of politicians bickered like schoolchildren over the failure of the House of Representatives to pass Treasury Secretary Henry Paulson's $700 billion bailout plan, the S&P 500 Index plunged to its worst day since the week of the 1987 stock-market crash, wiping out more than $700 billion in the index's market value. See Market Snapshot.

In other words, we all just spent that $700 billion today -- and still didn't get a rescue plan.

Let's be clear: The fat cats on Wall Street are still rich. And there must be several dozen of them in total. They were worth many millions, and now they're just worth several millions.

Heckuva job, Congress.

But by making this about a bailout of fat cats and not what it clearly was -- an emergency rescue of the global financial system -- Congress imperils the investments, deposits, money markets and life savings of millions of Americans, to say nothing of people around the world.

Is it Election Day yet?

Even the notoriously splintered government of Belgium was able to engineer a rescue of banking and insurance giant Fortis over 48 hours this weekend. But our own representatives, faced with the gravest economic threat in 70 years, took more than 10 days to hash up this rescue plan, and then rejected it anyway.

In total, more than $1 trillion was wiped off the value of the entire U.S. stock market Monday, as measured by the Dow Jones Wilshire 5000 Index. Asian markets will certainly plunge tonight, followed by the European markets Tuesday morning -- and many of the latter suffered their worst losses ever Monday.

In case anyone in the House failed to notice, the constituents affected by this decision reside well beyond the representatives' little districts. Four major European financial institutions were bailed out over the weekend. More will come. Wachovia Corp.'s (WB) takeover Monday morning made it just the latest U.S. bank to go down. With no rescue plan in place, even our biggest banks remain under threat.

The markets will bounce back -- perhaps even this week. Another crack at a bailout will be taken in the coming days, most likely. We will get through this, ideally without a painful recession.

But when we finally catch our collective breath and look back, we'll realize this was never about fat cats. The House as a whole missed that completely. Instead, small investors and savers around the world are left to twist in the wind as the systemic failure that till now had been merely theoretical takes place right before our eyes.

At some point, the pain will become deep enough that even Congress will get that message.

Until then, we've finally got an answer as to whose fault it is.

David Callaway is editor-in-chief of MarketWatch.