It amazing me how the Tea Party has successfully thrown the world into economic recession. Their psychotic obsession with killing engines of growth and giving money to rich people, combined with the destabilization of the global economy through the threat of u.s. default is amazing. Economist warned us that even the threat of default could shake the markets, they were right. Add on top of it the weak economic data, the realization that there will be no more stimulus and instead SPENDING CUTS, combines with a fed that has exhausted monetary policy to do anything, European debt issues, and the realization that politicians will not make sound economic choices.... And you get today's global crash. The great recession is back! And probably here to stay for 10 years+
You're crazy if you think the tiny amount of cuts budgeted for next year is causing the crash. You probably don't believe it, and just doing what people do in the D&D though.
Don't forget that Congress, who is responsible for economic reform, is on a 5 week vacation. But yes, let's just blame Obama for celebrating his 50th birthday. STOCKS GO DOWN, BLAME OBAMA!!!!!11
Were you in outer space the past few weeks? The markets went into 7 straight days of decline as they got spooked by the idea that gov't couldn't realistically address things like deficit spending. The economic news was the fuel on top of the fire. Markets have a psychology to them, it's not perfectly based on information and data as much as people try to make that out to be.
Europe has been imploding for a while. And it's clear the market was watching and reacting to the debt debate. Markets would calm when they thought a deal was close and when talks broke of tank.
It's gotten a lot worse recently. The implosion of Italy is pretty new. There was nothing really new about the debt talks and agreement. The market never really bought that the US would default.
Krugman made this post about Italy on July 11. http://krugman.blogs.nytimes.com/2011/07/11/fall-of-rome/ Fall of Rome? I’ve been relatively sanguine about Italy, in a depressed sort of way: the debt level is high, but the deficits have been fairly modest, so I thought the Italians could limp along for a long time. I may have been wrong: Italy 10-year This could get very interesting, in the worst sense. The chances of a real euro breakup (as opposed to one or more small peripheral economies falling off) are still small, but no longer negligible. Update: That’s the interest rate on Italian 10-year bonds.
Italy debt crisis has been known for months now. It's only come to ahead because of all the other factors hitting world markets, including u.s. economic news. The realization that default is a real risk - the U.s. getting as close as it did was too real - plays a part in all of this. Now anything is imaginable. Default, the Euro failing, anything. You may not agree - but you can not say your logic is the absolute answer any more than i can say mine is. I can come up with repudiable sources to back up my POV, and I am sure you can do yours.
I wonder now if people will begin to realize that the stimulus was driving expansion as much as preventing us from dropping into a free fall....which it looks like we are just about ready to do...
No, it's come to a head because it's gotten worse. CDS's have spiked in the last week. The ECB intervened in the markets yesterday. The ECB re-opened its emergency programs yesterday. The Euro-zone is having an emergency meeting over the next few days. Something *very real* has changed there. It's a cascading crash there similar to what we saw here in 2008 with new crazy things happening every few days. Nothing of the sort of is happening here. We've had a consistent slowdown over the last several months with small data points each day pointing in the same general direction. Economic slowdowns are part of the business cycle - they don't cause total market meltdowns.
