Dow Plunges, Stocks Tumble

The Dow Jones Industrial Average plunged 350 points this morning and 830 points in the past two weeks. Stocks are tumbling. The S&P Index is also down. More here. What's the cause? The LA Times says:

The debt ceiling debate, economic reports and Europe's government-debt crisis contribute to Wall Street losses.

Nice going, Congress and President Obama.

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    maybe this (5.00 / 2) (#1)
    by CST on Thu Aug 04, 2011 at 11:29:08 AM EST
    will actually get congress to wake up.  Since the unemployment rate apparently isn't cutting it.

    Now that wall street's suffering too, they might feel motivated to act.

    Probably not though, unless it's another bank bailout.

    Don't worry, (5.00 / 1) (#13)
    by observed on Thu Aug 04, 2011 at 12:22:57 PM EST
    more tax cuts are on the way, including another reduction for businesses on the payroll tax.

    Yeah (none / 0) (#3)
    by Ga6thDem on Thu Aug 04, 2011 at 11:40:59 AM EST
    I'm not sure you want them to act. They'll probably think the right thing to do is bail out Wall Street. Funny how the deficit doesn't matter where the "Masters of the Universe" is concerned.

    They have continued to bail out Wall Street (5.00 / 5) (#6)
    by Militarytracy on Thu Aug 04, 2011 at 11:49:48 AM EST
    through QE2.  And they did it without regulating the crooks in any meaningful way and they did until commodities started starving people and toppling governments.  Didn't create a job though for anyone.  Our markets are based on sheer bull$hit though now and I don't know where this stops at.  Europe is done with the fantasy making, and if they won't do it the same way we do it...realities will collide and I don't know where the bottom is when the fantasies can't survive.

    Wall Street isn't suffering (none / 0) (#9)
    by The Addams Family on Thu Aug 04, 2011 at 12:06:17 PM EST
    see MT's comment #5

    the only ones suffering are the "little people" whose retirements were stolen by Wall Street - time to strip those assets again


    But (5.00 / 1) (#2)
    by TeresaInSnow2 on Thu Aug 04, 2011 at 11:30:25 AM EST
    I thought the poor market performance this week was all about the debt ceiling....;-).  snark.

    I am now even more sure... (5.00 / 3) (#10)
    by Addison on Thu Aug 04, 2011 at 12:07:33 PM EST
    ...that the debt ceiling wasn't really contributing to last week's declines at all. There was more than enough bad news to explain a ~450 point drop. This week is even worse, of course, but at least it will lead to some bargains in the next few days.

    Maybe this (5.00 / 2) (#4)
    by Ga6thDem on Thu Aug 04, 2011 at 11:42:04 AM EST
    will spur some primary opposition to Obama? Naw, but a gal can hope can't she?

    Quick....Quantitative Easing 3 now (5.00 / 3) (#5)
    by Militarytracy on Thu Aug 04, 2011 at 11:42:51 AM EST
    Which will make the rich in shadow banking richer, will not improve unemployment rates, make anyone "saving" poorer.....but Tim Geithner cannot have this.  This faux leveraged to the hilt make believe wealth not based on any economic fundamentals was supposed to save us and make the job creators so confident that they gave us all a job and benefits and retirements and everything.

    It appears (5.00 / 2) (#7)
    by cal1942 on Thu Aug 04, 2011 at 11:55:13 AM EST
    the Confidence Fairy is grounded.

    More bullsh!t Conservative wishful thinking economic theory dashed on the shoals of reality.

    It's long overdue. The Market has been (5.00 / 2) (#11)
    by tigercourse on Thu Aug 04, 2011 at 12:16:45 PM EST
    ignoring broader economic conditions for years now. It was overbought before the terrible decisions Obama and the Congress made in the past couple weeks. And now people are in panic mode. Unless the unemployment numbers have ridiculously good news (they won't) this should continue.

    Almost 2 years ago I was in California on a business trip (I'll be going again, FAA willing) and remember reading an article in the hotel USA Today about people blaming Obama for a failed stimulus, even then. Nothing has changed since then. That stimulus did fail, and neither Obama nor the Democrat in congress seemed to even contemplate doing anything after that. This has been a sad, ridiculous few years.

    Luxury goods are flying off the shelves, (5.00 / 1) (#16)
    by KeysDan on Thu Aug 04, 2011 at 12:45:42 PM EST
    according to a page one article in the NYT by Stephanie Clifford. Nordstrom has a waiting list for a Chanel sequined tweed coat at $9100. Neiman Marcus has sold out in almost every size of Christian Louboutin platform pumps at $775 (but you do get two shoes, a left and a right), Mercedes Benz said it sold more cars last month in the US than it had in any July in five years. Tiffany's first quarter sales were up 20% (thanks in no small part to the Gingrich's) and are up also at places like Gucci and Givenchy.  What changed?  Retailers and analysts say  mostly the stock market and shopping psychology.  So, it looks like happy days are  here again for some during the first term,  and to be here soon in the second term for everyone else, owing to the tinkle down theory of economics now in vogue.

    Smart cars (5.00 / 2) (#22)
    by Abdul Abulbul Amir on Thu Aug 04, 2011 at 01:16:35 PM EST
    Mercedes Benz said it sold more cars last month in the US than it had in any July in five years.

    Well those low priced Smart cars are a Daimler product and none were being sold five years ago.  That more units are moving after adding an under $20,000 product to a high price line does not say much about "luxury goods" in general.  Perhaps it says more about Daimler's need to move down market.


    Mercedes Benz July sales (none / 0) (#33)
    by KeysDan on Thu Aug 04, 2011 at 02:25:54 PM EST
    were 21065 vehicles, a 16.7 percent improvement over July 2010.The highest volume performers for the month were the E and C Class,  the gateway for new and young buyers, especially the sporty C Class.   During July, the Smart car sales were 327.

    Interesting. I think I see (none / 0) (#36)
    by Towanda on Thu Aug 04, 2011 at 02:39:04 PM EST
    300 of those SmartCars in Chicago -- quite an increase in those on the streets here lately.

    Again (none / 0) (#43)
    by Abdul Abulbul Amir on Thu Aug 04, 2011 at 02:56:11 PM EST

    The highest volume performers for the month were the E and C Class,  the gateway for new and young buyers,

    "New and young" is another way of saying buyers at the lower end of the price curve.



    ha! (5.00 / 1) (#45)
    by CST on Thu Aug 04, 2011 at 03:02:35 PM EST
    not if they are buying Benz's.

    Not to Defend, but (5.00 / 1) (#51)
    by ScottW714 on Thu Aug 04, 2011 at 03:59:04 PM EST
    These are clearly middle class purchases, it's not a $9000 jacket. E&C classes are in the Suburban price range.  Expensive, sure, but they are average upper middle class suburbia fixtures.

    But that only means that one example is bad, the wealthy are gutting the middle class, and now they don't know what to do with their fortunes.


    C-300 lease $276/month. (5.00 / 2) (#64)
    by sarcastic unnamed one on Thu Aug 04, 2011 at 05:22:26 PM EST
    Vehicle Capital Reduction Residual

    Lease a 2011 Mercedes-Benz C-300 - Specifications and Features
    Zero Down Available

    Payment: $276

    $276/month is not "rich" folk.


    Smart Car, average $15,000; (none / 0) (#52)
    by KeysDan on Thu Aug 04, 2011 at 03:59:51 PM EST
    Mercedes E Class, $45,000; Mercedes C Class, $34,000.   Most would not consider the Smart Car as a luxury product, and that, I think, is where you started.

    And a tricked out (5.00 / 1) (#59)
    by Abdul Abulbul Amir on Thu Aug 04, 2011 at 04:33:48 PM EST
    Ford F-150 lists at $50K+.  Sorry, but $45k and $34k vehicles are not robber baron rides.  

    The point remains as you have noted, Daimler's unit sales increase came at the bottom of the price range.  


    The rich continue to do (5.00 / 2) (#58)
    by gyrfalcon on Thu Aug 04, 2011 at 04:27:43 PM EST
    very well.  Tax revenues went up substantially in my state the past year, entirely from the high earners.  Revenues from everybody else were essentially flat.

    The rich are paying more (none / 0) (#102)
    by BrassTacks on Fri Aug 05, 2011 at 02:09:36 AM EST
    Where you live?  

    Read what he actually wrote again... (none / 0) (#104)
    by Addison on Fri Aug 05, 2011 at 02:13:04 AM EST
    Yeah, we have a modestly (none / 0) (#119)
    by gyrfalcon on Sat Aug 06, 2011 at 01:23:07 AM EST
    progressive state income tax.  But whether we do or not, the point is that the already well-to-do have become even more well-to-do over the last three years.

    Be fair (none / 0) (#17)
    by jbindc on Thu Aug 04, 2011 at 01:02:18 PM EST
    The Louboutin pumps are fabulous!

    I can not fathom (none / 0) (#19)
    by CST on Thu Aug 04, 2011 at 01:07:35 PM EST
    how anyone can stand up straight in those shoes.

    Honestly, I commend you if you can.  I would fall flat on my face.


    The funny thing is (5.00 / 1) (#21)
    by jbindc on Thu Aug 04, 2011 at 01:16:19 PM EST
    I'm such a reverse snob - I know almost nothing about designer names.  My sister pointed out some characters on TV wearing the Loubotins and I had no idea what she was talking about!

    But I do love the red on the soles of the shoes - and no, I would probably kill myself if I tried to walk in them!


    they really are beautiful (5.00 / 1) (#24)
    by ruffian on Thu Aug 04, 2011 at 01:21:24 PM EST
    I too would never buy them or try to walk in them, but as a work of art I approve.

    The latest on high-end shoe trends... (none / 0) (#30)
    by Addison on Thu Aug 04, 2011 at 02:03:57 PM EST
    A couple months ago I was in NYC for an interview and picked up a NY Times. I was in LaGuardia long enough that I ended up reading the Style section. It turns out Louboutins are out.

    "Portals to Power"
    Published: June 19, 2011

    http://query.nytimes.com/gst/fullpage.html?res=9F0CEFD81631F93AA25755C0A9679D8B63&scp=3&sq=l ouboutin&st=nyt

    Her suit was Chanel but emphatically not matronly Chanel. Her wrists were manacled with slave bracelets from Cartier. Her shoes were Manolo Blahniks because not only did she look like money, she was money. And women in her position, the early adopters of high-end acquisition, have shifted footwear allegiance lately, abandoning Christian Louboutin with his flashy, too-obvious red soles and returning to Mr. Blahnik, the cobbler who first brought the world a $750 stiletto so comfortable a woman could wear hers to scale Mount Everest.

    I didn't get the job, though, so I haven't had a chance to see what July brought in terms of high-end Manhattan shoe trends. I've only read local papers. I think Payless is having a sale on Reeboks.


    Don't forget to include Ferrari (none / 0) (#41)
    by BTAL on Thu Aug 04, 2011 at 02:47:00 PM EST

    Amid a generally blah spring for car sales, Ferrari just turned its best half year in history, with revenues up nearly 20 percent from the year before. Worldwide, it delivered 11.8 percent more cars in the first half of 2011 than it did in the first half of 2010. And the U.S., its largest market, is booming. Sales in North and South America (with the U.S. accounting for the overwhelming majority of sales) were up 23.9 percent in the first half, to 939.



    The fiscal toolbox = band-aids (5.00 / 3) (#18)
    by Addison on Thu Aug 04, 2011 at 01:04:23 PM EST
    When I hear a reporter talk about, "what tools are left in the fiscal toolbox" I remember that what they really mean is: How little can the government do without actually doing something.

    Shut the Front Door! (5.00 / 1) (#27)
    by Militarytracy on Thu Aug 04, 2011 at 01:32:53 PM EST
    Literally...someone Shut the Front Door!  Or I can just stop watching :(

    good to know (5.00 / 1) (#31)
    by cpinva on Thu Aug 04, 2011 at 02:05:46 PM EST
    all that "bi-partisan" hostage taking on the debt ceiling resulted in the markets feeling better. or not.

    I had (5.00 / 2) (#53)
    by lentinel on Thu Aug 04, 2011 at 04:06:46 PM EST
    a sense that the drama behind getting an agreement to avoid default was so much bullsht. Something to get us to agree to anything lest some catastrophe engulf us.

    If we didn't pass this horrible Obama-Boehner piece of sht legislation the stock market might crash. God please let them pass something. Anything.

    So they passed it.

    So now we have a draconian non-elected committee in charge of our futures.

    Now we have an end to unemployment benefits - benefits which Obama supposedly traded for the extension of the Bush tax cuts.

    They keep the cuts.
    They keep the money.

    And guess what?
    The stock market crashes.
    Of course the very rich can ride this out sans probleme.
    But the small investor who had been looking for some way - any way to make a buck in this ghastly economy - wiped out. This is something that Wall Street likes to do every so often. Get rid of the rabble.

    Obama is in cahoots with these right wing freaks.
    That much should be obvious to anyone by now.

    Nice going, Congress and President Obama.

    The Stock Market does respond to only one thing (5.00 / 1) (#78)
    by NYShooter on Thu Aug 04, 2011 at 07:41:23 PM EST

    While daily movements, up & down, are normal responses to any number of reasons, if you back up and look at any long term charts of the major indices, they move in lock step with Corporate profits.

    After the catastrophic plunge (due to Lehman's default) the markets began a dramatic, and sustained, march upwards. Many people wondered how this could be as millions were being laid off, stores were empty, and economic activity dropped to a crawl. The answer, obviously, was that the factors hurting regular people (Main Street) were different than those affecting the Fat Cats (Wall Street)

    Once it was determined that our Government made the conscious decision that regular people (the lower 99%) were expendable, and all efforts were going to go to assuring that the Ruling Class would receive 100% of Government aid, their profits were assured, and the Markets responded in kind.

    While the lower 99% are suffering immeasurably Corporate profits are hitting record highs, and they are sitting on a windfall two trillion dollar bonanza, mostly due to the Obama/Geithner policy of draining the middle class of their treasure and transferring it to the criminals who designed, and implimented this catastrophe.

    I could give you a list of the instruments they used to effect this reverse transfer of wealth, but it would be too long for a blog like this, and anyway, thats what Google is for.

    Like that Market Maven, "Deep Throat," said 35 years ago, "follow the money."

    Causes: "Economic reports" such as (none / 0) (#8)
    by Towanda on Thu Aug 04, 2011 at 11:56:17 AM EST
    people aren't buying stuff that businesses sell.

    June downturn in consumer demand worst in years, down from already lousy level of consumer demand.

    BTD has been saying so for some time now. . . .

    Tomorrow (none / 0) (#32)
    by ScottW714 on Thu Aug 04, 2011 at 02:25:22 PM EST
    Employment report, which looks like it's going to be worse then the last 2.

    And Obama says... "Lower payroll taxes Congress".

    Almost magical, we are right at hitting 10% unemployment, and the President thinks lowering taxes, which hasn't worked for 10 years, is the solution.

    Not to mention his inability to take any responsibility and subtly shift blame to Congress.

    This is a classic Bush move.

    **Anyone know if the FAA people are considered unemployeed, and if so, will the report include them ?


    Eh, not quite right there. (none / 0) (#34)
    by Addison on Thu Aug 04, 2011 at 02:30:56 PM EST
    Actually, expectations are for a relatively positive jobs report:

    Friday brings the government's July employment report, which is expected to show 84,000 additional nonfarm payrolls in July, after June's meager increase of 18,000 jobs. The unemployment rate is slated to inch down to 9.2%, from 9.3% in June

    Still not good enough, though.


    There have been a whole slew of (none / 0) (#39)
    by Anne on Thu Aug 04, 2011 at 02:44:59 PM EST
    layoffs and closing-up-shops announced in late July and again this month, events that aren't going to show up in the newest report, so I suspect that whatever marginal "good news" is in the employment report will be short-lived and cold comfort - and entirely swallowed up in the stock market sell-offs.

    Three times that number of new hires (none / 0) (#103)
    by BrassTacks on Fri Aug 05, 2011 at 02:12:40 AM EST
    Are needed before we begin to see the unemployment rate go down.

    They started the reporting here (none / 0) (#35)
    by nycstray on Thu Aug 04, 2011 at 02:34:22 PM EST
    yesterday. Lead story on the local news was about the new job losses and how the improvement we were seeing (still at a bit over 12%) may have been false hope . . .

    and yes, we were supposed to see some job increases soon due to several new projects, one being a new airport terminal . . . .


    What? Hasn't worked in 10 years? (none / 0) (#65)
    by jimakaPPJ on Thu Aug 04, 2011 at 05:23:06 PM EST
    You need to review the unemployment numbers after the Bush tax cuts.



    Already saw them (none / 0) (#72)
    by Yman on Thu Aug 04, 2011 at 06:45:18 PM EST
    So under 5% unemployment (none / 0) (#108)
    by jimakaPPJ on Fri Aug 05, 2011 at 10:18:18 AM EST
    is bad???



    You have to actually READ ... (none / 0) (#109)
    by Yman on Fri Aug 05, 2011 at 11:22:56 AM EST
    ... the report, instead of making up straw arguments:

    Private-sector jobs are only 1.0% higher than in March 2001. The substantial rise in employment supported by increased defense spending more than accounts for this modest gain in private-sector jobs. In comparison, private sector jobs rose by an average 9.1% in past cycles, and the lowest previous gain was 6.9% ...

    The unemployment rate has become a poor indicator of labor market conditions because so many people have withdrawn from the labor force. This unprecedented decline in labor force participation itself undermines a key argument made for the tax cuts: that lower marginal rates would substantially increase incentives to enter the labor force...

    ... the Bush Administration acknowledged that strong job growth should be expected without tax cuts. It projected that 4.1 million jobs would be created between mid-2003 and the end of 2004 without the 2003 tax cuts, and that 5.5 million jobs would be created with the tax cuts. In fact, Congress enacted even deeper tax cuts than those on which the Bush Administration's estimates were based. Even so, only 2.6 million jobs were created over that 18-month period. Thus, by the Bush Administration's own analysis, the 2003 tax cuts failed to create more jobs than would have been expected without the tax cuts.

    "Wow", indeed.


    BTW - "Under 5%"??? (none / 0) (#110)
    by Yman on Fri Aug 05, 2011 at 11:49:31 AM EST
    If you're simply going to look at the lowest unemployment rate under Bush and claim that it proves that his tax cuts reduced unemployment, that's an easy game to play.  Let's see ... Clinton increased taxes (particularly on the wealthy) in '93, and his lowest unemployment rate was under 4%.  Heck, even after including the recession Clinton inherited from Bush I, the average unemployment under Clinton was a full point less than Bush II, and 2.3% less than Reagan.



    Funny... (none / 0) (#113)
    by ScottW714 on Fri Aug 05, 2011 at 12:09:11 PM EST
    Bush was good for employment, good one, not even the most devoted are that diluted.

    So in your mind (none / 0) (#117)
    by jimakaPPJ on Fri Aug 05, 2011 at 05:34:34 PM EST
    under 5% unemployment, around $2. gasoline, low inflation and  a DJIA around 12500 (when the Demos took control of both houses) is bad????


    Sure wish we had some that bad ole stuff back.


    The point was the Bush tax cuts ... (none / 0) (#118)
    by Yman on Fri Aug 05, 2011 at 07:24:03 PM EST
    ... and their effect (or, more accurately, lack thereof) on unemployment.

    By your standards, we should return to the days of the Clinton administration.  He raised taxes on the wealthy and his record on unemployment was better than Reagan, Bush I or II.


    Why don't we look at the (none / 0) (#121)
    by jimakaPPJ on Sat Aug 06, 2011 at 09:21:11 AM EST
    statistics ?

    They had no effect??



    Absolutely, ... let's look ... (none / 0) (#122)
    by Yman on Sat Aug 06, 2011 at 09:41:04 AM EST
    ... using your source, at the at the statistics after Clinton raised taxes on the wealthy.

    Wow ...

    ... so much better than when Bush cut taxes.  Using your logic, I guess we know what needs to be done ...


    Bush cut taxes for two reasons (none / 0) (#123)
    by jimakaPPJ on Sat Aug 06, 2011 at 11:58:29 AM EST
    The first was because the economy started to tank in March 2000 and the NASDAQ lost 50% of its value by March 2001. We were clearly on our way into a recession.

    The second was the result of the economy's collapse after 9/11.

    The cuts sustained the economy until 2007 when the housing bubble started to burst.

    Said bubble aided greatly by Clinton's expansion of Freddie and Fannie in 1999 and the Democrats, left by Barney Frank, blocking Bush's attempt in 2003 to improve regulation. McCain tried again in 2005 with the same results.

    The Feds managed to get that somewhat under control by spring of 2008 but the rapid rise of oil prices, and the Democrats blocking all efforts to stop it, finished the economy off.

    In late summer and the fall Bush and the Democrats took action and oil collapsed bringing a per gallon price of $1.81 by the time Obama took office. He immediately reversed the previous policies and gasoline has climbed ever since.

    And the economy remained in recession.

    And the stimulus didn't work.

    And we now have our debt rating lowered to the level of Belgium.

    My congratulations to the geniuses who brought this on us. Obama is truly the smartest man in the world.

    (Sarcasm pointed out.)


    So many winger theories ... (none / 0) (#124)
    by Yman on Sat Aug 06, 2011 at 02:54:42 PM EST
    ... unsupported by a single shred of evidence.  What was it you were saying before?  Oh, yeah:

    I also remember that an old Internet truism is that he who makes the claim provides the proof.

    From a guy who never links to a single study to support his winger theories, that's pretty funny.


    Ask and you shall receive....of course (none / 0) (#125)
    by jimakaPPJ on Sat Aug 06, 2011 at 09:00:09 PM EST
    all of these except the MSNBC quote I have used before.

    And you know that. You are just trying to delay and reframe.

    From the perspective of many people, including me, this is another thrift industry growing up around us, said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

    Link NYTimes

    The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.


    ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

    Link NYTimes

    Labor Stats

    Facing gas prices near $4 a gallon and a pivotal national election, congressional Democrats allowed a ban on offshore drilling to lapse in September

    But times change, and on Tuesday, the Obama administration - with gas prices roughly half what they were and many Democrats' having been swept into office - blocked offshore drilling plans put in place at the last minute by the Bush administration, including plans to open the national outer continental shelf for drilling.

    Interior Department Secretary Ken Salazar also announced last week that his agency would block drilling on public lands in Utah, criticizing the Bush administration for releasing its offshore drilling plan just days before leaving office.


    In its first action to overturn Bush administration policies on energy, the Obama administration on Wednesday said it will cancel oil drilling leases on more than 130,000 acres near two national parks and other protected areas in Utah.

    MSNBC Link

    Historical gasoline prices link


    Still waiting (none / 0) (#126)
    by Yman on Sun Aug 07, 2011 at 07:34:30 AM EST
    Yes, Jim.  You do occasionally post link to random facts ... simple enough.  Where you always fail, however, is posting links that provide evidence of the conclusions you draw from those facts - usually related to causation.  Couple of recent examples:  1)  Your claim that the increase in CAFE standards will result in higher gas prices, and 2) your claim that Bush's lifting of the EO banning oil drilling caused the drop in oil/gas prices.  The reality is there isn't a single study to support either claim, or even a single expert in the industry who has made either claim.  Which is precisely why you never provide a single link to support your silly claims, other than the following type of "logic":

    The rooster crows every morning.
    The sun comes up every morning when the rooster's crowing.
    Therefore, the rooster causes the sun to rise!
    What?!?  I just gave you the evidence!

    Classic Jim!


    I understood the game you were (none / 0) (#127)
    by jimakaPPJ on Sun Aug 07, 2011 at 10:02:21 AM EST
    playing and I understand that no matter what I post you will disagree and make claims that ignore the links.

    That is what makes you Dark Avenger's perfect replacement as my Shadow.

    Have a nice day. I've proven my point!


    Heh, heh ... (none / 0) (#128)
    by Yman on Sun Aug 07, 2011 at 10:24:04 AM EST
    In other words, you don't have a single bit of evidence to support your claims, while at the same time you demand it from others.

    Funny, but not quite as funny as this -

    Have a nice day. I've proven my point!

    Yeah - just like your hero.


    Nope (none / 0) (#129)
    by jimakaPPJ on Sun Aug 07, 2011 at 11:47:39 AM EST
    I have plenty of "evidence" re my comments/positions and you furnish the one showing that you are my Shadow.

    Have a nice day. Don't forget to do a quick come back claiming something or the other.



    Really? (none / 0) (#130)
    by Yman on Sun Aug 07, 2011 at 12:11:32 PM EST
    Still waiting for a single study or expert claiming that oil/gas prices would rise due to the CAFE standards, or that Bush's lifting of the offshore drilling EO caused the drop in oil/gas prices, yet you haven't provided even one.  Not even a fake, winger expert, ala "climatedepot.com".

    I guess some things are even too silly for the fake experts.



    I see my Shadow is here. (none / 0) (#131)
    by jimakaPPJ on Sun Aug 07, 2011 at 10:57:52 PM EST
    I see you STILL ... (none / 0) (#132)
    by Yman on Mon Aug 08, 2011 at 07:48:34 AM EST
    ... can't cite any evidence.

    The reason is obvious.


    My Shadow can't read. (none / 0) (#133)
    by jimakaPPJ on Mon Aug 08, 2011 at 08:55:51 AM EST
    You "shadow" reads just fine (none / 0) (#134)
    by Yman on Mon Aug 08, 2011 at 09:02:10 AM EST
    It's just that links to random facts do not establish causation.

    Nice Going Congress and Obama? (none / 0) (#12)
    by AngryBlackGuy on Thu Aug 04, 2011 at 12:20:59 PM EST
    Italy and Spain are about to default, which is somehow Congress and Obama's fault???????

    The Nikkei just came off of 5 week lows.  European markets are down. Every market in the globe is taking hits.

    But thanks Obama and Congress for single handedly causing a global downturn among every market on earth despite the fact that two of the biggest economies in the EU may default, and not in a deficit ceiling forced way but in an "oh my god they have no more money" way.

    C'mon people. Be fair.

    Italy and Spain have been about to default (5.00 / 2) (#14)
    by tigercourse on Thu Aug 04, 2011 at 12:24:33 PM EST
    for going on years now.

    Yes, this drop is due to many factors and blaming it all on our terrible elected leaders is not entirely fair.

    But to pretend that the "Hey let's cut spending in the middle of this recession" plan isn't contributing would be foolish.


    No (5.00 / 1) (#38)
    by AngryBlackGuy on Thu Aug 04, 2011 at 02:43:54 PM EST
    The position you those two countries are in right now is entirely different than where they were before.

    If you want to get into an econ battle about bond rates and such, that's right up my alley.

    The president of the European Commission didn't write letters like this before:


    What is going on the EU has far more impact on our recovery than anything Obama or congress is doing.  

    If the Euro takes a huge blow, all bets are off.  The ramifications will be catastrophic.

    The truly depressing part is that it will be too complicated for people to understand and they will turn to the remedies they know:

    spend more or reduce the deficit.

    And the reality will be that this is a crisis that won't respond to either of those.  We will be relatively helpless, and people won't understand why.


    Fairness (5.00 / 8) (#15)
    by Addison on Thu Aug 04, 2011 at 12:36:41 PM EST
    The reason for the decline is largely that the American economy is not following the parabolic upswing of post-recession growth, but appears to be dipping again. And if America's in worsening trouble, all of the other problems you cite have no real external solution or international structural support. It's a trapdoor underneath which is another trapdoor.

    The stock market has been FANTASTIC since around March 2009. It recovered nearly all of it's value in such a brief time that it represented the greatest extended rally in history. And yet that didn't reflect the American economy as it was -- weak and still hollowed out on the demand-side. There's been confirmation of that with a few bits of data over the past couple weeks, and phantom gains are getting recouped.

    If the United States had implemented stronger demand-side stimuli for the American consumer, there'd be more demand, there would be more manufacturing, global sourcing of materials would be higher, economic liquidity would be higher, and overall the stock market would be less illusory. I don't think that's up for debate. There are only a tiny handful of people who could successfully push for demand-side stimulus. Rep. Kucinich and Sen. Sanders are not among them. The presidents of Italy and Spain are not among them. President Obama and Sec. Geithner are among that handful. They practically ARE that handful.

    Blame should rest on those with the most to regret. That is fair.


    Yes, friends in Europe (5.00 / 1) (#26)
    by Towanda on Thu Aug 04, 2011 at 01:30:37 PM EST
    have been writing for weeks about how the debt ceiling mess here has been weakening confidence  there -- "Europe is watching and worrying about what Obama is doing and isn't doing" has been the constant comment.  Those comments really escalated in the last couple of days owing to the result, the debt ceiling bill, which they say was very bad news for global markets.

    Huh? (1.00 / 1) (#25)
    by Abdul Abulbul Amir on Thu Aug 04, 2011 at 01:27:33 PM EST

    The stock market has been FANTASTIC since around March 2009. It recovered nearly all of it's value in such a brief time that it represented the greatest extended rally in history.

    If the market has not fully recovered, as you note, it is a bit much to call it fantastic performance.  A loss no matter how small is not fantastic.

    With Obama's EPA killing US jobs left and right an increase in demand won't mean much other than more imports from places that allow production.



    Drop-quoting a penguin into the Sahara... (5.00 / 1) (#28)
    by Addison on Thu Aug 04, 2011 at 01:54:53 PM EST
    I said since March 2009, didn't I? Oh yes, there it is, right there in the bit you quoted. Even taking into account the last two bearish weeks, the stock market is still up 58% from March 2009 -- which is fantastic considering the underlying economic realities (In early July it was up over 70%). Over the past two years the market has done incredibly well for itself, and any commodity or index can have fantastic runs within discrete periods of time without necessarily hitting historical highs (why do I have to explain that?). I made this overall context very clear in my post. You're just willfully ignoring the context of what you've drop-quoted so you can argue against rhetorical things instead of substantive things. It's annoying and it's a waste of everyone's time.

    Nope (none / 0) (#29)
    by Yman on Thu Aug 04, 2011 at 01:58:39 PM EST
    If the market has not fully recovered, as you note, it is a bit much to call it fantastic performance.  A loss no matter how small is not fantastic.

    That's just silly.  The OP was discussing the period after the market tanked ("since March, 2009").  In that period (even including this week's heavy losses) the market's gone up @80%.  The fact that it hasn't matched it's previous high isn't relevant to it's performance during this period.  It's more than accurate to describe an 80% gain in less than 18 months "fantastic".

    With Obama's EPA killing US jobs left and right an increase in demand won't mean much other than more imports from places that allow production.

    Ridiculous, winger talking points with zero evidence.


    It would help if the EPA eased up bit (none / 0) (#105)
    by BrassTacks on Fri Aug 05, 2011 at 02:17:57 AM EST
    to encourage more businesses. Off shore drilling in my state would help to hire more people too. Coal jobs may be awful but I know a lot of folks who would love to do that work but mines can't open. It's hard to balance all of it.

    Misapplied superlative alert (none / 0) (#46)
    by Addison on Thu Aug 04, 2011 at 03:10:31 PM EST
    Just want to correct myself. It was one of the greatest extended rallies in history. Percentage-wise the rally from 1995-1998 and the 1930's rallies (however you want to divide them up, if you want to) were greater.

    Addison's analysis is good (none / 0) (#48)
    by klassicheart on Thu Aug 04, 2011 at 03:31:43 PM EST
    Obama (5.00 / 2) (#20)
    by PatHat on Thu Aug 04, 2011 at 01:10:41 PM EST
    Just signed a bill that ties his Administration's hands. He has virtually no tools to stimulate demand since has agreed not to spend money...nay, reduce spending...during a recession.

    What Wall St is saying is that Obama sold his constituency down the river for no apparent reason.


    Quit Speaking Wall Street... (5.00 / 1) (#37)
    by ScottW714 on Thu Aug 04, 2011 at 02:39:56 PM EST
    ... and acting like no one is responsible for anything.  

    Just Happened, sure we filled our pockets and emptied yours, but who could have predicted any of it ?

    Those ~500 people in Congress control the purse strings and essentially the the world's premier economy ?  

    They are suppose to have a sliver of knowledge about world economies and devise a future that can withstand some hiccups.  We set the economic tone for the world, we aren't some struggling economy, and we are definitely not suppose to shake every time an economy the fraction of ours has issues.


    I am speaking truth (5.00 / 1) (#40)
    by AngryBlackGuy on Thu Aug 04, 2011 at 02:45:45 PM EST
    When we pulled the economy in France down with our crisis, we never thought much about our impact on other countries.  If the EU goes down, it will be payback and there will be little we can do, just as they were unable to escape our mess.

    Sometimes there is no answer.


    Exactly (5.00 / 1) (#47)
    by ScottW714 on Thu Aug 04, 2011 at 03:28:57 PM EST
    Who do you think was behind that crisis, ergo the European crisis, ergo the current mess, the legislators possibly ?

    Congress is to blame.

    They pretend it was someone else, but nearly all of them were sitting members when those policies were being pushed.

    There is plenty we they can do, quit with the 'we are helpless mantra', it's regurgitated Wall Street non-sense.  

    If Congress was more concerned about the country then getting elected, this mess wouldn't exist because any idiot knows raising taxes will cure many of the ailments we have.


    Europe has its own problems (5.00 / 1) (#49)
    by klassicheart on Thu Aug 04, 2011 at 03:33:54 PM EST
    The ECB head is doing a terrible job and the mechanism to run Europe is faulty...

    You can't handle the truth. (5.00 / 4) (#50)
    by Anne on Thu Aug 04, 2011 at 03:48:25 PM EST
    Unless I'm missing something, "thinking much" about the global and local impact of our policies is what these people are elected - or appointed - to do, but really thinking about it might have to be followed by "doing something" about it, and that would have meant revealing just how sick our own system was allowed to get.  

    You could have put all the people who have decision-making input into one pile and not have found enough collective courage to address the real problems - no, we'd rather bail out the bad actors with trillions and "hope" we can keep the charade going.  Principled leadership in action.

    Your "we're helpless" argument has worn out its welcome; the ferocity with which you cling to it is matched only by your dearth of critical thinking skills.

    Shouldn't you be looking up polls by now?


    You (5.00 / 2) (#54)
    by lentinel on Thu Aug 04, 2011 at 04:08:30 PM EST
    are speaking propaganda.
    And it is really tiresome.

    What do you think (none / 0) (#67)
    by AngryBlackGuy on Thu Aug 04, 2011 at 06:02:17 PM EST
    "Obama sucks" is.

    The fact that it comes from a liberal mouth doesn't cleanse it of being a conservative talking point.

    One person's propaganda is another person's truth.  You do realize that?


    Truth needs facts (none / 0) (#111)
    by PatHat on Fri Aug 05, 2011 at 11:54:30 AM EST
    "Obama sucks" is an opinion.

    That Obama signed several bills that hurt his traditional constituency is a fact.

    Obama has been a disaster for people who are not rich is probably opinion, but there's mostly truth there.


    Are You Awake (none / 0) (#115)
    by ScottW714 on Fri Aug 05, 2011 at 12:29:54 PM EST
    Pretty sure this is a "Congress is to Blame" discussion, but funny that your subconscious brought "Obama Sucks" into the discussion.

    The fact that it comes from a liberal mouth doesn't cleanse it of being a conservative talking point.

    What ??????????
    First, it's not coming from 'a mouth', it coming from pretty much everyone here but you.  If anything, you are 'a mouth', which, using your bad logic means that it doesn't cleanse it of being a liberal talking point.

    Second, are you suggesting that there is no point in which a liberal can bash their leadership without it being a republican talking point.

    And you might want to Google 'Talking Point', pretty sure saying someone sucks doesn't qualify, and certainly can't be republican if democrats agree.  I think "Obama Sucks Less" would be a more accurate description.

    And lastly, no one said 'Obama Sucks' in this discussion, you brought it in and propped it up to make a point.  That would be the text book Straw Man.  


    Pay back? (5.00 / 2) (#56)
    by Militarytracy on Thu Aug 04, 2011 at 04:12:15 PM EST

    If we'd have had ethical banking and financial practices and if he had not sold the European Union into that currency swap baloney that made money appear magically out of thin air and leveraged the whole planet to the 13th power.....sheesh....do you really think there are clear lines between the shadow banking of the EU and our shadow banking :)  Everyone owes each other the same Euro/Dollar 14 times over.


    if we can (none / 0) (#42)
    by CST on Thu Aug 04, 2011 at 02:48:09 PM EST
    pull France down, than in theory we could also have helped push them back up, no?

    No doubt (none / 0) (#23)
    by TeresaInSnow2 on Thu Aug 04, 2011 at 01:20:15 PM EST
    No doubt I can find your posts from last week that blame the decline on the debt ceiling negotiations.  Now this.  Hopefully you have more excuses up your sleeve.

    Stop (none / 0) (#55)
    by lentinel on Thu Aug 04, 2011 at 04:09:58 PM EST
    calling us "people" - you arrogant s.o.b.

    Leadership (none / 0) (#107)
    by mmc9431 on Fri Aug 05, 2011 at 07:32:23 AM EST
    We still are the monster engine that drives the world's economy. When our own leaders throw in the towel and say that there's nothing they can do about the economic crisis, it's little wonder that panic ripples across the globe.

    The debt ceiling battle badly damaged our economy. The world was bombarded with dire news on an hourly basis by politicians whose only objective was to score political points. When you have the Republican leader in the Senate state that he will allow nothing to be done that would make Obama look good, we have a major problem.

    The other problem is that Obama steadfastly refuses to accept this fact. He stayed above the fray on the stimulus, HCR and now the debt ceiling. In each case he allowed the issue to drag on entirely too long before he stepped in. By the time he entered the debate, the battle had already been lost.

    Obama is the leader of the Democratic Party and president of the U.S. He needs to stand up and lead. He can't continue to try and hide from the issues by sitting on the sideline and allowing the "kids" in Congress to work it out for themselves.


    Largest single drop in 3 yrs (none / 0) (#44)
    by nycstray on Thu Aug 04, 2011 at 03:00:26 PM EST
    warranted a special news report program break in right now . . .

    A question for ABG, not a loadead (none / 0) (#57)
    by jeffinalabama on Thu Aug 04, 2011 at 04:19:17 PM EST
    question, either.

    ABG, didn't you state in the past couple of weeks that the market would tank with out the stimulus? I seem to remember you mentioning that following a 1 percent drop in the DJIA.

    What happened? We now have the increase, so what's going on with the market decline now?

    You're the Wall Street guy-- by that, I mean, I know you're in Georgia, but you have meetings with the bigwigs and work as a corporate lawyer, IIRC.

    Can you explain it to me? If you don't write a snippy reply to me, I'll not write one to you on this thread. Truce thread, in other words. I'd really like a thorough explanation, please?

    Answer (5.00 / 2) (#68)
    by AngryBlackGuy on Thu Aug 04, 2011 at 06:12:10 PM EST
    There are many different factors that can impact a market increase or decline and there are many different increases and declines.

    I think most sustained market declines are due to a number of factors.

    If this one persists, I think there are a number of causes (in no particular order):

    1. Lack of projected stimulus
    2. Spain
    3. Italy
    4. Greece
    5. Uncertainty over our ability to govern towards solutions
    6. Housing softness

    I don't think anyone can point to any one of those factors and say "this is why it happened" but if we were to pinpoint why this particular sell off happened today, I think the events in europe were at least half of it.

    When we discuss the correlation between our government's actions and the economy, we rarely hear anyone factor in the outside influences we have little control over.

    And the same thing happens when we are booming.  As a dem, I love to call Clinton's years a huge accomplishment for him, but China began its ascent in earnest at that time and so did Germany and a bunch of other countries with a real impact on us.


    You just make it up ... (none / 0) (#75)
    by Yman on Thu Aug 04, 2011 at 06:59:35 PM EST
    ... as you go along.

    When we discuss the correlation between our government's actions and the economy, we rarely hear anyone factor in the outside influences we have little control over.

    And the same thing happens when we are booming.  As a dem, I love to call Clinton's years a huge accomplishment for him, but China began its ascent in earnest at that time and so did Germany and a bunch of other countries with a real impact on us.

    Not sure of what point you were trying to make, but China was going to grow irrespective of the US or its policies.  It was underdeveloped country with huge advantages in terms of cheap resources and labor.  Germany, however, did not "begin its ascent" in the 90s, and the fact that you would say it did leads me to suspect that your "bunch of other countries" claim is also BS.  Of course there were some other countries with faster-growing GDPs (there always are).

    So what?


    Riddle me this (5.00 / 1) (#80)
    by AngryBlackGuy on Thu Aug 04, 2011 at 07:48:33 PM EST
    A very unusual thing happened this week in the world of the fat cats.  If you are such a fat cat, say from Greece, and you were trying to put about 100mil or so into certain banks in NYC, the banks charged you negative interest.  In other words, the concern in the EU was so great and the need to stash cash anywhere where it was safe and would lose value was so great, that the bank was charging you money to deposit funds with them.  

    Now if you no much about the way banks work, that is literally the world turning upside down.  That is a tangible sign of what the financiers that we all view with suspicion are contemplating to save their wealth.

    And that, not a fight over 500 billion here, or a trillion there, spread out over 10 years, should be demanding our attention.  The spending cuts at the heart of the debate seem huge but the reality is that they have little short term effect. Two trillion over 10 years with none of it hitting until 2012 or 2013 really doesn't mean much in the big scheme of things. Not on a truly macro level and not to the micro level of the short term economy or the average Joe.  It's a fight I wish we had one, but not one that will impact this recession in any real way.

    What really matters is that the EU just added Belgium, the home of some of the EUs most stable banks to the list of financial systems that have to start reporting their true financial status.  What matters is that some of the largest banks in the EU have started to show the same inability to get credit that Lehman did in the weeks before it went under.

    I think that we are concerned with our domestic battles, and we should be, they do have some long term consequences. Not end of the world type stuff but effects on real people.  But my fear is that the factors really driving our recovery or lack thereof are global and not being discussed by politicians or pundits because, like urge original financial crisis, they are simply to large and complex to get a handle on.  I am no expert in such things, but I know enough to listen to the folks that do and they aren't talking about 500 billion in cuts versus tax increases. They are talking about the ramifications of the simultaneous economic collapse of hugely important economies. In that light, the crash of our economy over a trillion or so dollars seems really short sighted. Not that we shouldn't care, we just need to expand our awareness of the much bigger picture.  

    Shorter: the wall street fat cats we discuss so often are scared. Very scared. And although we see the interest of the common man as being unaligned with theirs, there is more of a corollary than we admit.

    We should be scared too.


    None of which ... (none / 0) (#84)
    by Yman on Thu Aug 04, 2011 at 08:41:16 PM EST
    ... addresses my issues with your post (i.e. that you're just making $hit up - again).

    BTW - Is this going to be the refrain that we hear for the next year+, as to why it's not Obama's fault ("It's all beyond his control!  He can't just wave a magic wand!")  and why your predictions of major economic improvement don't come to be?



    thank you, ABG (none / 0) (#87)
    by The Addams Family on Thu Aug 04, 2011 at 08:58:38 PM EST
    Define "cheap resources and labor" (none / 0) (#79)
    by Rojas on Thu Aug 04, 2011 at 07:45:11 PM EST
    What resources in particular?
    What technology would anyone go to China for?

    I know this is your pet peeve ... (none / 0) (#83)
    by Yman on Thu Aug 04, 2011 at 08:37:51 PM EST
    ... but I'm not sure how you could argue the point that China had (and has) advantages in terms of resources and labor.  They have the largest potential for hydroelectric power of any country.  They have large deposits of coal, iron ore, petroleum, natural gas, mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, rare earth elements, uranium, and other minerals, which they have been able to exploit relatively inexpensively due to lower labor costs and lax environmental regulation.  They also have a labor pool that is becoming better educated by the year, and their average wages are a fraction of the wages in the U.S.

    What's your point?


    Wages rising (none / 0) (#88)
    by Madeline on Thu Aug 04, 2011 at 08:59:17 PM EST
    HONG KONG -- Wages are surging this year in China and among its main low-wage Asian rivals, benefiting workers across the region. But the increases confront trading companies and Western retailers with cost increases and are making higher prices likely for American and European consumers.


    Maybe they'll come back to the states.

    Data shows that entry-level workers that make up 80 percent of the private sector workforce were paid an average of $8.93 per hour two years ago and are now making $8.76 per hour.


    I hope that's true (none / 0) (#89)
    by Yman on Thu Aug 04, 2011 at 09:03:23 PM EST
    I've seen several articles discussing how a combination of rising wages, expensive oil/transportation and higher US productivity mean some manufacturing might return to the US.

    I haven't seen anything much other than anecdotal information, but I hope it's true.


    Oh I agree that the ascent was inevitable (none / 0) (#120)
    by Rojas on Sat Aug 06, 2011 at 09:06:59 AM EST
    But the trajectory was not.

    Mineral extraction is a machinery intensive endeavor. Cheap labor is of little advantage there although lax/no environmental and safety regulations can provide economic advantages in the short term. If China's huge labor pool was an actual advantage in this regard they wouldn't be buying raw materials from Australia when they have unexploited reserves of their own.

    The real growth is coming from a technology exchange in which first world multinationals export technology, a majority of it developed with government largess, in exchange for a captive and complaint workforce. See Magnequench and Chinas ascent in the strategic area of rare earth magnetics for example.

    So yes, it's a pet peeve of mine. It's fundamentally unfair the way this has been carried out. It's certainly of concern that the plutocrats have been selling off our seed corn does not even raise eyebrows among the VSP that control debate. It's not unlike the rape of the Soviet Union when that government collapsed. The difference is the claim, by those who have profited or not yet effected that ours is still functioning.



    Without the stimulus? (none / 0) (#60)
    by gyrfalcon on Thu Aug 04, 2011 at 04:34:06 PM EST
    Do you mean without raising the debt ceiling?

    On your question-- I don't recall ABG ever suggesting that the debt ceiling business was the only thing that could negatively affect the stock market, do you?

    I think he's entirely right that failure to pass the DC, a ratings downgrade and/or actual default would absolutely have brought the market down.  But avoiding those things is/was not a magic bullet to protect it from other issues, like Europe's rapidly deepening financial crisis and bad figures coming out in the U.S. economy.


    I got the impression (5.00 / 1) (#61)
    by jeffinalabama on Thu Aug 04, 2011 at 05:09:51 PM EST
    from ABG that stocks wouldn't plummet with this fix. But I'm not sure what defines a 'plummet.' A couple of weeks ago, 1 percent was a plummet, now today 2.5 percent is... could these simply be market corrections, or have these happened as a consequence of the debt ceiling deal? It's complicated, so I'm hoping for a nuanced answer. I can always ask follow-up questions on concepts or things I don't understand at first read.

    That's why I'm asking, not insinuating anything. I don't think that a 2.5 percent drop is terrible in the long run, but ABG is the market man. I don't work with these corporations. He has an expertise there I don't have.

    It never hurts to get information from people who work in specific fields... that's why I'm so cavalier about polling in general. First, most of the organizations involved, Gallup, NBC, CNN/and their partners are big, for-profit corporations with agendas.

    Second, the overwhelming majority of TV reporters don't know how to properly analyze polls, leading to some outrageous claims.

    For the market, I like asking people who work in the market. It's a value-neutral question, not a 'gotcha' question. ABG keeps an eye on non-US markets and issues.


    Minor technical detail (5.00 / 2) (#66)
    by BTAL on Thu Aug 04, 2011 at 05:54:07 PM EST
    but today was a 4.31% drop for the DOW and a 5% drop for NASDAQ.  Effectively double 2.5% you mention.

    Tomorrow's job report and July's monthly summary report could add even more downward pressure.

    IMHO, more than a "correction" is occurring.


    Last I saw was 2.5 before (none / 0) (#74)
    by jeffinalabama on Thu Aug 04, 2011 at 06:54:48 PM EST
    writing. Thanks for the update.

    No plummet is a big deal (5.00 / 2) (#69)
    by AngryBlackGuy on Thu Aug 04, 2011 at 06:14:15 PM EST
    at these levels if it doesn't last for us mortals not making money on movement.  

    But if the Dow stays at this level for two weeks, let's say, then we are in trouble I think.  And not just in the US. Globally.


    Thank you (none / 0) (#70)
    by Towanda on Thu Aug 04, 2011 at 06:28:22 PM EST
    for a quick, useful answer (as well as your more detailed one below) that provides some perspective, so that we may get some sleep tonight without fearing the end of the world tomorrow, as the tv pundits suggest.

    Soon, maybe.  But not tomorrow.


    Thanks. (none / 0) (#73)
    by jeffinalabama on Thu Aug 04, 2011 at 06:47:54 PM EST
    Is it the issue of the billions that are suddenly no longer in the market? If they re-appear in higher finishes, that alleviates the plunge, correct?

    Thanks again for answering, my TL colleague.


    And yes, I meant the debt cieling, not (none / 0) (#63)
    by jeffinalabama on Thu Aug 04, 2011 at 05:10:56 PM EST
    stimulus. Thanks for catching that.

    Nothing we can do (none / 0) (#62)
    by mmc9431 on Thu Aug 04, 2011 at 05:10:13 PM EST
    This is the same attitude they used with the housing disaster. Sit back and do nothing. The strong will survive and let the rest eat cake. And they call themselves leaders!

    I still want to know how they figure they can  personally escape a global depression? It won't be just the poor (or what's left of the middle class that crashes). A lot of wealthy people will find themselves wiped out in the process too.

    In addition there's are lot more of us around than there was the last time. Soup lines could stretch for miles.

    I am scared (none / 0) (#82)
    by AngryBlackGuy on Thu Aug 04, 2011 at 08:04:13 PM EST
    Because I don't know what we can do.  If I were to take off my liberal hat and really try to figure out the ten best strategies to fix what I fear is really wrong, I come upnwith nothing.

    Fundamentally our unemploment levels are tied to the banks.  And although we express outrage against them, their health is vital to us.   And they are interconnected in a way no other institution is. So although the US banks may be celebrating an uptick, it could all be erased by banks in the UK bottoming out. And it is a viscious circle. The banks are the largest holders of government securities in every country. If a country's debt becomes unstable or loses value, the banks lose capital and can't lend.  No lending, no economic growth. No economic growth, bank runs and no jobs.  No jobs and the country's debt becomes less valuable. And the cycle repeats.

    That is happening right now in Spain for example. Bailouts are a bad word in both liberal and conservative circles, but it could be the only thing that saves them.

    I would like Obama to come out this week and explain what is happening on a global level, but I don't think he can.  We are too focused inward and angry at all of our leaders to listen or care.

    That's what's driving my hopelessness this week. Not the debt deal or even the prospect that Obama loses.  He is my man but this is bigger than him.


    Here's a nightmare for you then (none / 0) (#85)
    by BTAL on Thu Aug 04, 2011 at 08:47:46 PM EST
    Germany decides to finally pull the plug on the socialist experiment labeled the EURO/EU.

    Another Major Feud Between the German Central Bank and the ECB Over Resumption of Bond Purchases; Will Germany Leave the Euro?

    The Germans are fed up with "monetizing the debt" of many of the other EU countries at the detriment of Germany.  France will not be far behind.

    The challenge then is whether the US is in a position to lead and yes profit from the dismemberment of the EU.  Will the US be able to out play China in that scenario?


    Exactly (none / 0) (#93)
    by AngryBlackGuy on Thu Aug 04, 2011 at 09:59:31 PM EST
    That is what concerns me. This kind of thing seems far off and disconnected from us but Germany, one of the only stable powers in th EU, leaving the Euro would set this whole thing off.

    You talk about financial turmoil now? We havent seen anything compared to what that will do to 401ks and domestic output if played the wrong way.

    I want Krugman talking every day about that for the next two weeks. People need to understand what could be coming.


    Interesting post. (none / 0) (#86)
    by jeffinalabama on Thu Aug 04, 2011 at 08:48:12 PM EST
    I think you have hit on several reasons why I still think Keynesian approaches have merit.

    Even with deficit spending, purchasing durable goods, even if they just go into a warehouse, creates demand.

    Five years ago, for example, the Defense Department bought thousands of laptop computers. They were shipped to Iraq, but never issued.

    They weren't brought back either, because five-year-old computers don't have the latest bells and whistles-- important bells and whistles, but newer technology nonetheless.

    Washers, dryers, these could be purchased... every Army barracks has at least one of each, and they usually are pretty beat up. Vehicles... the military bought civilian Dodge 1.25 ton pickup trucks for a few years after the Chrysler bailout...

    What else do we produce? I'm sure the government could use various durable items. Visio televisions, manufactured in the US? why not use them for computer monitors, for example?

    How about ships? the US is sorely hurting in the merchant marine, and a governmental program with some lease purchase involved... what would be carried? no idea, but 50 - 100 more cargo ships might be a better purchase than the second engine for the Joint Strike Fighter, or even the JSF itself... Gerald USN may not agree, there, but I'm sure we can find stuff to buy. Then sell it at low or no interest, re-do those housing projects that still exist in smaller towns and cities...

    As they say in business, "I'm just throwing things at the wall to see what sticks."

    Now, without a Keynesian approach, how can demand be stimulated? I'm open to ideas...


    Why I am scared (none / 0) (#71)
    by AngryBlackGuy on Thu Aug 04, 2011 at 06:34:19 PM EST
    I think that when the government freaks out and seizes the ratings agencies documents and property, a country is over the edge:


    Translation: Italy is trying to delegitemise the entire credit ratings industry because the credit ratings guys are saying Italy is toast.

    Now we like to bash the agencies because of the housing crisis, but they do serve a crucial and valuable function in the economy.  They are a global private police force of sorts making sure that no one can BS their way into loans and rates that theu don't deserve.

    Italy is in essence jeapardizing the entire system because they have no other options.  When you know that the newspaper is going to report the truth and you can't counter that truth, you attack the newspaper.

    This is the third largest economy in the EU folks.

    Let me put this into some perspective:

    Greece, Italy and Spain each represent a significant chunk of a connected economy that rivals our own.

    Our employment rate is a staggering 9.2% and we are trying to push through stimulus to reverse course.

    The unemployment rate in Spain is 21 percent.

    The unemployment rate in Greece is 15 percent.

    The unemployment rate in Italy is a relatively fantastic 8%.

    But the difference is that instead of the posturing arguments of a lack of funds made here, those countries really are broke.  There is no escape.  And that's a huge chunk of the EU.

    It's like if California and New York suddenly had employment rates of 18% and then the other states had to bail them out with massive payments and guarantees.

    It would screw us up quite nicely. And it would screw up other related economies.  

    Throw in a once in a lifetime earthquake/tsunami to one of the world's other most important economies and you have the makings of a double dip recession without Obama ever making a move that Krugman didn't like.

    Obama and his policies share blame in this, no question. But there is a much bigger picture.

    Think about it: our argument was that the Wall Street Fat Cats got what they wanted out of the deal.  If that was the only factor, why did they all just freak out and run screaming?

    It's bigger than just us.

    My tending to agree with kdog (5.00 / 1) (#76)
    by jeffinalabama on Thu Aug 04, 2011 at 07:01:16 PM EST
    on these rating agencies notwithstanding, the real unemployment rate does hover around 20-21 percent within the USA, but our safety net measures do not come close to matching Germany... I'll have to check Spain, though, not too sure.

    To tell you the truth ABG, I have been little concerned with Spain, Portugul, Greece, Ireland, and Iceland, based on their size relative to the global economy. I worry that Italy could be a tipping point, just the vast numbers of countries in the eurozone having difficulties.

    But if France, Germany, Great Britain, or The Netherlands begin having more, deeper problems, I will join you in a heightened level of concern.

    I hope we can continue to disagree and fight concerning polls, though.


    The household balance sheets (5.00 / 1) (#90)
    by Militarytracy on Thu Aug 04, 2011 at 09:11:22 PM EST
    in Italy are fine though Jeff.  The people themselves are in excellent financial shape compared to American households.  Their economy is much stronger than ours and capable of recoveries that ours is not because we insisted that we needed to bleed our people completely dry first before any real solutions could be approached.  Their crisis is strictly a bank insolvency and financial market issue.

    Italy (none / 0) (#92)
    by CoralGables on Thu Aug 04, 2011 at 09:57:32 PM EST
    has another issue. The annual GDP is less than the national debt. Call it the Mendoza line of national debt, something the US is bumping against right now.

    Their debt was 116% of their GDP last year (5.00 / 1) (#98)
    by Militarytracy on Thu Aug 04, 2011 at 11:59:15 PM EST
    Most of their debt is owned by their own people though, and their business and household spreadsheets are excellent.  They are the antithesis of us in that department. They are still considered low risk because of those facts.  Nobody really knows why the "markets" are beating the crap out of Italy right now.  They have insolvency issues yes, but as gjohnsit wrote about today banks all over the EU are insolvent we just don't have the evidence in black and white, it is being hidden.  I think I understand a little though why some players are obviously gunning for them. Our "post recovery" economy is now based entirely upon the health and wealth of shadow banking and as far as they are concerned they run this damned world now.  Italy's economy is not though and they are being punished for it, at least for today....tomorrow will be much different I'm sure because tomorrow is going to be hell for everyone most likely.  I think that is why the Italian government raided the rating agencies though.  They aren't an utter horror story so to speak, but the way this game is being played right now they haven't played the way the other big money players want them to play all this.  If they won't start bleeding their people and become convinced that that must happen NOW, they will be punished if the big money can find a way.

    Did you read where (none / 0) (#99)
    by Militarytracy on Fri Aug 05, 2011 at 12:18:16 AM EST
    they fear money market funds will break the buck because of the EU crisis?

    Well said jeff (none / 0) (#81)
    by AngryBlackGuy on Thu Aug 04, 2011 at 07:51:19 PM EST
    As someone (5.00 / 2) (#77)
    by Ga6thDem on Thu Aug 04, 2011 at 07:07:15 PM EST
    who worked for credit rating agencies in the past I must tell you that there is some fraud going on with them. A lot of it is not really deliberate but the problem is that when you're putting in a lot of garbage numbers you're going to have a credit rating that really isn't all that honest.

    So Italy does have a legitimate point here. The only reason people give these credit ratings agencies any credence is because they don't know what all is involved.

    Frankly, even for personal credit you can have a so-so credit rating simply based on the fact that you have closed a credit card or you use cash for everything.


    Well, I don't disagree, but (none / 0) (#100)
    by NYShooter on Fri Aug 05, 2011 at 12:22:18 AM EST
    a huge problem the EU countries have that we don't is their inability to manipulate their currencies.

    Traditionally, an exporting country that is having problems selling their products outside their countries could lower the value of their currency, thus making their products more competitive.

    That option, with their membership in the EU, has been taken away from them. And that could be the death knell for their economies.


    The cause is (none / 0) (#91)
    by SOS on Thu Aug 04, 2011 at 09:15:54 PM EST
    all the smart republican money parked short and giving major haircuts and shearing to the herd investors.  Just watch we'll see another pump and dump coming again soon.

    The Nikkei market (none / 0) (#94)
    by AngryBlackGuy on Thu Aug 04, 2011 at 10:05:18 PM EST
    Just dropped a larger percent than ours did while everyone here is going to sleep.

    I hope you are right because the currency markets are freaking the *}%[! out right now.

    I'd rather this be a ploy for rich folks to get richer. The alternative is that this is the real deal and that is worse. We will probably know more mid day tomorrow.


    I agree with you last paragraph... (none / 0) (#95)
    by jeffinalabama on Thu Aug 04, 2011 at 10:21:40 PM EST
    a ploy beats the alternative any day of the week.

    As we speak, the Nikkei is down 3 1/2 % (none / 0) (#101)
    by NYShooter on Fri Aug 05, 2011 at 12:26:29 AM EST
    Honk Kong, Indonesia, and Taiwan are all down 5 %

    This was always going to (none / 0) (#106)
    by Militarytracy on Fri Aug 05, 2011 at 07:27:34 AM EST
    eventually happen based on how we were but weren't solving the problems.  I really can't believe you are this stunned by what is going down now.  This will continue for awhile.

    In my typical style (none / 0) (#96)
    by CoralGables on Thu Aug 04, 2011 at 10:22:09 PM EST
    I tapped out what's left of my IRA contributions for the year at today's closing prices. May have been smarter to wait a few more days, but I have a hard time staying calm on dips like we've had this week and felt the need to jump in the water (it feels cold).

    Buying on the way down has always been my way, but it wouldn't surprise me if on Monday I come back and say maybe I should have waited a few more days. Lucky for me financial markets have no effect on my sleep. Only late night pepperoni and onion pizza does that.

    Next time I'm there, (none / 0) (#97)
    by jeffinalabama on Thu Aug 04, 2011 at 10:26:56 PM EST
    it's mojitos on me. I'll be in the Ft Lauderdale airport on Saturday the 27th, getting back from Colombia. I WILL have 500 grams of coffee for you... Sello Rojo or better. If we don't meet up, I'll mail it to you. I still owe you a solid.

    Oh, you can't get Sello Rojo quality up here...I'll buy it the day it's roasted, so it ought to be no more than 7 days old when I get to Ft. Lauderdale.

    Guess I ought to ask if you like coffee first, though~


    Sounds delicious (none / 0) (#112)
    by CoralGables on Fri Aug 05, 2011 at 12:01:35 PM EST
    but indeed I am not a coffee drinker. Haven't touched it since an all-nighter prior to a Quantitative Research Methods final in Gainesville.

    I don't envy your trip home from Colombia. I used to put my daughter on a plane at the end of every summer and still remember the aftereffect of emptiness quite well.


    Yah, at least I get to fly (none / 0) (#114)
    by jeffinalabama on Fri Aug 05, 2011 at 12:26:02 PM EST
    and spend time, but the separation sill lingers.

    Glad to know you crammed for that stats final!


    Guess I ought to admit (none / 0) (#116)
    by jeffinalabama on Fri Aug 05, 2011 at 12:39:09 PM EST
    I LOVE doing Quantitative research methods, and even more, pushing the philosophical boundaries within the field.

    I really ought to have a crew-cut and pocket protector.