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August 5, 2011 in Business, Nation/World
Stocks end a day of wild swings mostly down
NEW YORK — If you looked away today, you might have missed a market rally. Or a plunge.
A soothing government report on employment in July eased concerns that the U.S. might slide back into a recession, and the Dow Jones industrial average rose as much as 171 points soon after trading began. But fears that Europe’s growing debt crisis might threaten U.S. banks and the fragile economy ruled Friday.
After its early rise, the Dow fell more than 400 points and was down 243 just before noon. Then it rose nearly 400 points in less than an hour and was up 135 points. The rest of the day, the blue-chip stock index bounced up and down, sometimes by as much as 100 points in less than half an hour. The Dow Jones industrial average ended the day up 61 points, or 0.5 percent.
Stocks have been “like a tether ball being smacked around the pole” by worries about weakening economies around the world, said Sam Stovall, chief investment strategist for Standard & Poor’s Equity Research.
Even less-developed countries like Brazil and China, which have been the motor of global growth for three years, are slowing. Brazilian stocks have dropped nearly 30 percent since Nov. 4 as the country tries to stem inflation. Manufacturing in China shrank in July for the first time in a year.
In Europe, debt problems are spreading, threatening the continent’s third and fourth largest economies. In the U.S, a possible debt default was averted earlier this week, but concerns remain. Chief among them: less spending by consumers, which is leading to anemic growth by both manufacturing and service companies and too few new jobs to lower the unemployment rate significantly.
Investors also worry that the federal government is more likely to hurt the economy than help it. Instead of more spending, the government is trying to reduce its budget deficits by spending less.
Randy Warren, chief investment officer at the investment company Warren Financial Service said markets were jittery over how leaders in the U.S. reacted to the debt crisis here and how leaders in Europe have reacted to the growing debt problems there.
“The fear was that they had no plan to deal with the situation,” Warren said.
In Europe, Italy or Spain could become the next country unable to repay its debt. The two countries have Europe’s third and fourth largest economies. European leaders and central bankers might not have the cash needed to prop them up until a larger financial rescue fund can be established.
“The burden of debt has become much more onerous because the outlook for growth is sliding back. That is very concerning for the markets,” said Don Smith, economist at ICAP, the largest inter-dealer broker in the world. “The fear is ultimately about defaults and business failures.”
In the U.S., few believe the government is likely to stimulate the economy through spending, as it did with its $800 billion stimulus program in 2009. Washington will instead cut spending by more than $2.1 trillion over 10 years to reduce the deficit.
“When investors took a step back and looked at the deal, it became clear that the long-term debt issues have yet to be resolved and that some hard decisions still need to be made,” said Bob Doll, chief equity strategist at BlackRock. “Investors do not like uncertainty.”
That contributed significantly to the up and down trading on Friday and all week, strategists said. Some investors bought stocks after steep price declines, said Ron Florance, an investment strategist at Wells Fargo Private Bank. That helped reverse the midday loss. Others have rushed to sell their holdings before the weekend, he said. That contributed to the declines seen in the morning and the pared-back gains in the afternoon.
Such volatility often follows historic sell-offs like the one Thursday, analysts said.
All three major stock indexes are in correction, that is, they are down 10 percent or more off their recent highs.
The Dow Jones industrial average fell 5.8 percent this week. It plunged 513 points on Thursday alone, the worst day for the Dow since 2008.
The S&P 500, the benchmark for most mutual funds, fell 0.1 percent Friday. It is down 7.2 percent for the week and 10.8 percent since July 22, when its steady declines began.
The Nasdaq composite index fell 24 points, or 0.9 percent. It is down 11.4 percent since July 22.
Commodities also fell on worries that weaker global economies will mean less demand. Crude oil’s price fell $8.82, to $86.88 over the week.
Overseas markets also fell. Tokyo, Hong Kong and China all closed down more than 2 percent. Taiwan lost 5.6 percent. Asian markets all closed before the jobs report was released in the U.S. In Europe, shares recovered some of their losses after plunging to their lowest levels in more than a year. Germany’s DAX index fell 2.8 percent. It had been down as much as 4 percent before the jobs report was released in the U.S. Other indexes showed smaller losses.
The yield on the 2-year Treasury note fell to 0.29 percent, after brushing a record low of 0.26 percent earlier Friday. Investors looking for safer assets have rushed to buy Treasurys, sending their prices higher and yields lower. The yield on the benchmark 10-year Treasury note rose to 2.56 percent after hitting a low of 2.39 percent on Thursday.
The rush to buy Treasurys is another reason markets experienced big swings Friday, said Karen Shaw Petrou of Federal Financial Analytics. Treasurys saw an influx of billions of dollars from European banks and from institutional customers of Bank of New York Mellon, she said.
Bank of New York Mellon holds $23.6 trillion of institutional client money in custody. On Thursday, the bank said it would charge customers with more than $50 million in deposits a fee to hold their money. To avoid the fees, institutional clients looked for other investments, namely Treasurys, Petrou said.
“Billions and billions of dollars that would be sitting on the sidelines have to find a place to go, and that’s driving the markets crazy,” Petrou said. “This is a huge structural change, and it really is driving a lot of the volatility.”
Florance, of Wells Fargo, said he expected stocks to remain volatile for the next several weeks until it’s clear how healthy — or unhealthy — the economy is.
The U.S. economy added 117,000 jobs in July, and hiring in May and June were not as bad as reported previously, the Labor Department reported. The unemployment rate inched down to 9.1 percent from 9.2 percent, partly because some unemployed workers stopped looking for work. Health care providers and manufacturers added jobs.
“From an economic standpoint, 117,000 jobs is hardly sufficient to boost the economy,” said Dan Greenhaus, chief global strategist at the trading firm BTIG. About twice as many jobs as that must be created every month in order to rapidly reduce the unemployment rate, which has been above 9 percent nearly every month since the recession officially ended in June 2009.
Even so, many analysts said the economy might not be as bad off as it seems. For one thing, companies have reported strong profits and are flush with cash. They also cut costs drastically during the recession.
Those in the S&P 500 have amassed more than $963 billion in cash. That’s up from $610 billion at the start of the recession, according to S&P. Earnings in the second quarter rose 11 percent from a year ago for the 422 companies in the S&P 500 index that have reported so far.
Even so, only four of the S&P 500’s ten industry groups are up for the year: Health care, utilities, telecommunications and consumer staples. Traders consider those companies to be relatively recession-resistant.
Procter & Gamble Co. rose 1.7 percent. The consumer products company’s fourth-quarter revenue and income jumped on strong sales in emerging markets.
Viacom Inc. rose 1.9 percent after the firm said its income and revenue increased more than analysts expected in the second quarter because of strong advertising sales and fees from cable companies.
Priceline.com Inc. surged 9.2 percent, the most in the S&P, after the company reported that it earned far more than analysts had expected in the second quarter as travel bookings on the website increased.
© Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Dirt: Kalispels to open second Fatburger 
The_Seer on August 05 at 8:54 a.m.
I repeat again today: Who freakin’ cares.
It’s capitalism, stupid. The whole next election should be about capitalism. It doesn’t work. Never has. What is supposedly the most efficient system for distributing goods, services and income is constantly on the verge of toppling. An investor at Bear Stearns sees a dog take a dump on a bridge and next thing you know “the markets were cautious today” on the news. Capitalism has required CONSTANT SUBSIDIZATION FROM THE PUBLIC COFFERS SINCE THE FIRST DAY OF THIS NATION’S EXISTENCE. It is anything but “private.” How many times has the treasury been raided to rescue the wealthy from themselves? Citizens in the U.S. need to really investigate the financial history of this country. I suggest beginning with Howard Zinn’s “A People’s History of the United States.
Once a majority of you complacently numbed minions discover the truth we can get on with joining the rest of the freaking civilized world.
93bird on August 05 at 9:21 a.m.
Where’s this civilized world you speak of genius? Is it the three fourths of this planet living in abject poverty? Just take a look at the map of world GDP:
http://en.wikipedia.org/wiki/File:World_Nominal_GDP_2010.svg
You don’t need to be a Wharton graduate to see the association between living standards and capitalism. Hell, even the communist Chinese have figured it out. Ask the billions of Chinese if they’d trade their taste of capitalism for anything else right now. You sound like the evangelicals calling for the end to the world. As far as I can tell, we’re still here. Sure, the system’s flawed and could be much better, but neither you, nor anyone else has a more tested, successful plan. That’s a fact.
The_Seer on August 05 at 9:27 a.m.
I’m waiting for Hawken’s usual cut and pasteathon to arrive…
He really got creamed on yesterday’s thread about this same topic. He still won’t reveal his scholarship and academic history, something he should be proud to do. He claims we’ll use that information to perform “character assassination.” Does anyone think that makes sense? Can’t he create a blog on here and post his “dissertation” as a word or .pdf attachment? force vector is correct: Hawken demeans the actual scholarship all of us who actually were scholars performed with his repeated falsehood of being a Ph.D.
It’s capitalism, stupid.
greyhound2 suggested these three things to restore the earning power of our working class, which is the real driver of our economy. 70% of the economy is consumer spending.
1. Return high tariffs to imported goods.
2. Restrict immigration by both nation of origin and profession.
3. Refuse charters to corporations that offshore U.S. wealth and labor.
I like to call them the “three R’s. All they really contain are principles that guided the economic policies of the U.S. for most of our history.
The_Seer on August 05 at 9:37 a.m.
93bird: All companies in China are required to at least 50.1% state owned. Many are completely state owned like banks, transportation, energy, etc. They are anything but capitalism. Besides, the majority of people in China still live on less than a dollar day. Hardly a shining example.
The nations with the highest standards of living are heavily socialized. Period. End of story. Look to Norway, Sweden, Finland, Canada.
johnclarke on August 05 at 9:56 a.m.
The President has two jobs packages before congress, They are being blocked by Republicans. How many jobs bills have been submitted by the GOP ?
liberal_in_right_wing_land on August 05 at 9:56 a.m.
Sear, I have been trying to get these tea bagging idiots to give an example of a country that has this small government they are all searching for that works.
The best examples of small government are countries like Afghanistan, Sudan, Somalia - well actually about half the countries in Africa would be an example of small government.
Where are the examples of countries succeeding with smaller government where capitalism runs everything? Hawken, Dazzee, gmorton?
DickAdams on August 05 at 9:57 a.m.
As Perot said when running for president about NAFTA.
There will a large sucking sound with jobs fleeing the country. Thanks Bill Clinton, who was the lead NAFTA cheerleader. And its too bad the citizens did not listen to Perot. He was right on the mark.
hawken on August 05 at 10:10 a.m.
We’ll see at 1pm Pacific, how the markets have done today, once the markets close. Yesterday, the sell off came late in the day.
Two things caused this bloodletting on Wall Street:
1- A global economy sinking toward a double dip recession. Some economists believe, as do I, that we have never come out of recession. This was exaggerated by the debt problems in Spain and Italy. As well as our own incapacity to deal with our debt.
2- The FED ended QE2 on June 30, after QE1, after printing trillions of dollars that have been propping up the Stock Markets. Now, a month later the Markets take a dive.
The markets have not been able to stand on their own without the printing of US dollars out of thin air. QE3 coming this fall or winter. Then, inflation will roar higher, greater than the actual 12% we are currently experiencing.
Note: The 12% number is inflation calculated as it was calculated in the Carter years. The government keeps changing the way they report such numbers, to make government look better that the actual numbers reflect.
Actual unemployment, U6, is closer to 23% today, than 16.2%, since long-term, discouraged workers, were defined out of official existence in 1994. They are no loner counted in the unemployment numbers.
http://www.shadowstats.com/alternate_data/gross-domestic-product-charts
johnclarke on August 05 at 10:29 a.m.
Oh, whatever PhD of cut and paste. The real reason was a manufactured crisis compliments of the Tea Party. Literally every economist predicted it. On the bright side; a fact that your expert analysis seems to have over looked - everyone ran to US bonds and away from the market.
Maybe if the Facist, anti-american Republican party would actually produce some jobs bills (like the President has) then things will look up. I have no faith in that, because they do not serve the people. They serve themselves and their corporate masters. At the very least, maybe they could stop BLOCKING job creation?
johnclarke on August 05 at 10:34 a.m.
Oh great, now it’s NAFTA and Bill Clinton, right Dick?
Specifically within NAFTA’s first five years of existence, 709,988 jobs (140,000 annually), were created domestically. Proponents point out that had there been any significant negative impact on the labor force because of NAFTA, it would have been evident in the initial years. Yet, the mid to late nineties was one of the United States’ biggest periods of economic growth. Classical macroeconomic theory stipulates that when a country is experiencing economic growth (i.e. GDP is increasing), then there will also be an increase in the participation of the labor force.Thus, because trade liberalization ultimately contributes to increases in GDP, it in effect, helps to bring the rate of unemployment down in a country. The U.S. experienced a 48% increase in real GDP from 1993-2005. The unemployment rate over this period was an average of only 5.1%, compared to 7.1% from 1982-1993, before NAFTA was implemented.
I just love how the right wing Con mouthpieces are totally silent about the destruction caused by the Tea Party, yet come up with wild theories like this is all due to NAFTA. Wrong.
woamike on August 05 at 10:38 a.m.
Seer,
Another series of straw men. Perhaps your PhD is in straw man creation??
The capitalism you always describe is NOT free-market capitalism, it is CRONY capitalism - that corrupt, incestuous relationship between certain (not all) businesses and and corrupt politicians. I also detest crony capitalism. Crony capitalism only serves the needs of politicians and a relative handful of non-politicians.
Free market capitalism has done more good, for more people than any system ever. Free market capitalism serves then needs and wants of both producers and consumers without prejudice. I know you’re a Marxist, but at least have the intellectual honesty to stop trying to stain free market capitalism with it’s corrupt cousin, CRONY capitalism.
You want to fight, reduce and eliminate cronyism? LIMIT the power of government and politicians. If it and they did not have sweeping powers to grant favor$, cronyism would be greatly reduced and we’d all be better off.
Dazzeetrader11 on August 05 at 11:01 a.m.
Seer and liberal don’t quite get beyond the “yokel” position. If any one has lived in China or done a fair anount of business there, you’d soon know that the government has a complete “hands off” the capitalist movement.
They never tamper. It’s the reason big companies do work there. 93 Bird…good post.
CHina actually helps companies and assists them. I suppose you’re wondering if unions are there…..NOT EVER. People’ s standard of living is improving by leaps and bounds. Emerging
capitaism works but does have some shortfalls that are self correcting.. China has learned from our mistakes. Prosperous as anything you’ll see.
YOu might be surprised that the children and HS kids go to school daily. If they miss, the parents are chastised and held accountable. . 2 week Summer break. I mean who needs a full 2 months off?? It’s ridiculous. They are focused on education.
It shows. US is distracted by things not in China. Obama is a joke to them. A mere child to toy with. He’d be a middle manager there. He should be that here too. The US has been on vacation since the 60’s in their view. We rested on success…..and it’s true. Freedom is a funny concept. It’s corrupted us but has made us stronger at the same time.. A law for pot…that’s taken years??? All the money spent…..China makes it illegal and if you get caught……
No corrupting society there. Building countries are serious and they are tough on distractions. America permits the likes of do nothings..know nothings…and gives em a stage to be mouthy.
IN China, you work at something. And you spend time in the military….like it used to be in America.
My point is that the US is soft and cannot compete with a focused country without union interference. Gov supports there…here? Well…we got Obama and all his advisors. Czars.
See how that’s worked out?
johnclarke on August 05 at 11:37 a.m.
“you’d soon know that the government has a complete “hands off” the capitalist movement.’
Wow, talk about a complete lack of credibility.
Scoutster on August 05 at 11:47 a.m.
Wow, woamike…
That free market capitalism sure sounds good.
What’s the down side? Why isn’t everyone doin’ it?
liberal_in_right_wing_land on August 05 at 12:01 p.m.
Dazzee lost what any credibility she had left when she said China keeps their hands off business. Thats truly about the most ignorant thing someone has said on here.
hawken on August 05 at 12:46 p.m.
Simple answer:
Liberal left, Keynesian, big government over-regulation, taxation, borrowing, spending and printing.
Both in Democratic, Socialist Europe and Democratic, Socialist, US.
hawken on August 05 at 12:56 p.m.
The last time we actually had a “free market system” is probably prior to 1913 when the Keynesian left FED was created.
The FED ultimately, controls our monetary police, business, Congress and the White House. Ben Bernanke is probably the most powerful Bureaucrat in the world.
In 1894, Democrats in Congress passed the Wilson-Gorman tariff, which imposed the first peacetime income tax. Known today as the “progressive tax.”
93bird on August 05 at 12:59 p.m.
Some of you need to hit the adderall. Dazzeetrader actually said “China actually helps companies and assists them.” So keep blaming the Tea Party, Congress, or even the President if you want. The fact remains that we’re in this mess because our government has borrowed too much, and spent even more. Same goes for the European countries in trouble. Like it or not, the rich capitalists have and will continue to fund everything this country does. The Swiss, South Koreans, Brazilians, Turks, Indians, and Russians have all figured out how to make a buck or two without the help of a bloated central government. For the seventy five people enjoying their amazing standard of living in Scandinavia I say “Enjoy”. I still like determining my own fate.
hawken on August 05 at 1:14 p.m.
Just as I predicted yesterday.
Volatility in the markets.
The DOW had over a 400 point swing from negative to positive, throughout the day, closing in the positive by a meager 60 points after a 10% sell off.
Just as I described yesterday.
The markets will act like fish out of water, flopping up and down and around on the shore, until it dies.
Soon, Comes Bernanke and FEd To the Rescue of the Dying Fish! Then comes QE3 and inflation like we have not seen in decades.
It’s ALL so predictable.
reservedparking on August 05 at 1:27 p.m.
So if it’s so predictable, whay aren’t you out there on the national stage predicting it, instead of holding forth with your audience of, oh, say, a dozen or so here… half of whom think you’re bonkers?
johnclarke on August 05 at 1:31 p.m.
Yes, the all knowing Hawken who can read something and then take credit for posting it here at the SR. Tell us, what else would you like to predict? The sun will set tonight? Wow, you are so awesome. Guess waht, super genius EVERYONE PREDICTED it. Market instability brought about by tea party idiocy. Why do you think the GOP went for the super committee? To prevent the tail from wagging the dog. They are just as tired of the Tea Party as everyone. The GOP is perfectly capable of looking stupid all by itself, tyvm.
Here is the Clarke prediction, and it’s a repeat. The Tea Party and right wing facism will be gone next election cycle. Buh-Bye.
Patanjali on August 05 at 1:32 p.m.
Every economy in the world has some socialistic elements and some capitalistic elements. Neither system in its pure form works. Within socialism there is no incentive to get ahead and within the purest form of capitalism everything can be bought and sold, even people. Slavery, whether outright ownership or economic slavery which allows no opportunity to break out of the cycle of payday to payday subsistence living (think tenant farmers from the deep south in the days after the Civil War or think of a worker responsible for the support of his family stuck in a minimum wage job) is capitalism in its purest form.
Capitalism MUST be regulated and some industries should be owned by the people (the government). The progressive income tax is an attempt to even out the means of production and the wealth so that it does not become cruelly concentrated into a few hands. It seems clear from the widening gap between rich and poor in this country that a greater effort must be made to re-distribute the wealth, not equally, but more fairly.
This means increasing taxes on the wealthy and eliminating tax loopholes.
Medical expenses often bankrupt middle class families. 75% of the bankruptcies filed in America are medical bill related and 125 people die every DAY in this country from lack of adequate medical care; that is 45,000 a year about as many as die in automobile accidents. A more socially responsible medical care system that covers everyone at 100% would eliminate these poverty issues and increase the quality of life for everyone. This can be done as it is in France at about 11% of the GNP, instead of the 17.6% that is spent within the U. S. “Medicare for all” would eliminate 400 billion dollars a year in medical administrative costs.
johnclarke on August 05 at 1:33 p.m.
Clarke prediction:
Hawken will post the word “Keynesian” sometime really soon.
hawken on August 05 at 1:36 p.m.
I don’t need or want, a national stage.
I’m content and doing quite well where I am. I am quite content with simple, country living and the financial gains that have been good to me over the years.
Besides, there are many on the national stage who are saying and have been saying, the same things for years that I have been saying on this web site.
None of them are Keynesian left liberals nor Keynesian left, RINO Republicans.
Time for my mid-day nap. I’ll check back later.
So far, I am batting 1,000.
johnclarke on August 05 at 1:36 p.m.
Patanjali, a dear friend of mine recently had a heart attack on a flight to Frankfurt. This ended up in a stint (sp?) to repair a blocked artery. The experience, according to the patient was so vastly superior to health care in the US, this person is actually considering moving to Germany.
Total bill with no insurance, as a non resident for the operation and 4 day hospital stay? $11,000 Euros.
johnclarke on August 05 at 1:37 p.m.
Clarke predicts the future ! You heard here first folks !
nslopeofw on August 05 at 2:24 p.m.
JC-
LOL I bet the TEA party ais prominent during the next election. I predict your predictions will be laughable!!
Take the challenge? I’m being honest, you willing?
Slope
gmorton on August 05 at 4:29 p.m.
The_Seer wrote,
“The whole next election should be about capitalism. It doesn’t work. Never has.”
LOL.
Sure. We all know it was Marxism which during the 19th century transformed a rabble of agrarian colonies in N America into the wealthiest, most innovative, most dynamic economy in the world – the first country in history in which a majority of its people *were not poor*.
Just as it transformed other acolyte states such as Cuba, the USSR, N. Korea, and Maoist China into economic powerhouses… .
Oh, wait …
You’re funny, Seer.
gmorton on August 05 at 4:34 p.m.
BTW way, Seer, what the next election should be about, and will be, if the Repubs nominate someone with any brains, is the role of government in a free society.
Scoutster on August 05 at 4:41 p.m.
nslopeofw
I’ll take the challenge. Our economy is about to get much, much worse. The Tea Party has blundered into success and made things worse than they would be otherwise. The electorate will remember the shout-downs at town halls (I can’t WAIT till Cathy’s!), the intransigence of the budget discussion, and the unwillingness to look at ANY revenue, not even being willing to close self-evident porkish loopholes.
Add to that no credible GOP candidate. Whoever it is will be anxious to embrace the middle and distance her/himself from the TP. (Unless, of course, the nominee is Bachmann or Santorum or some other far right radical, but I think that is unlikely. If that happens, the Tea Party will, indeed, be quite prominent. Let’s hope this happens, eh!)
The Tea Party will be irrelevant because it will be the only way the GOP will be able to capture the middle. And the only path to the WH is up the middle.
gmorton on August 05 at 4:53 p.m.
93bird wrote,
“You don’t need to be a Wharton graduate to see the association between living standards and capitalism.”
Here’s a more illuminating graph correlating per capita GDP with Heritage’s Economic Freedom Index:
http://www.themoneyillusion.com/?p=5575
He doesn’t give the correlation coefficient, but visually I’d guess it is > 0.8.
Of course, you have to keep in mind that for lefties, prosperity is not the important benchmark. Equality is.
bdr on August 05 at 5:02 p.m.
Maybe a little parody of market “S&M” is what we need…..!
get ready for a trim and slim S&M laugh!
http://www.youtube.com/watch?v=Blj06EyAz20&feature=fvwrel
hawken on August 05 at 5:06 p.m.
Let’s not forget “Obama Motors.”
Remember all of those GM and Chrysler stocks purchased on our behalf, while we didn’t want them? Remember?
Well, we lost $1.3 Billion on Chrysler.
GM closed down @ $25.95 a share today. We still own 500 million shares, 27% of GM
$53/ share is “break even” for for the taxpayer.
As of today, American taxpayers have lost $15.5 Billion in Obama Motors, GM, 1600 Pennsylvania Avenue NW
http://www.marketwatch.com/story/gm-results-may-hasten-treasurys-exit-2011-08-03?siteid=nwhwk
Don’t you just love these failed, Obama stimulus programs and bailouts?…. $16 Billion here…… $800 Billion there…..
Hiker on August 05 at 5:34 p.m.
The S&P just downgraded US government debt to AA+. The reason cited was because Republicans refuse to consider tax increases to get the budget back in balance.
gmorton on August 05 at 5:42 p.m.
The_Seer wrote,
“All companies in China are required to at least 50.1% state owned.”
Egad. Where did you get that nonsense?
Here’s an inventory of Chinese privately-owned companies. Many are public companies whose shares are traded on various stock exchanges. Few, if any, have any government ownership.
http://en.wikipedia.org/wiki/Category:Privately_held_companies_of_the_People’s_Republic_of_China
gmorton on August 05 at 6:07 p.m.
Hiker wrote,
“The S&P just downgraded US government debt to AA+. The reason cited was because Republicans refuse to consider tax increases to get the budget back in balance.”
Uh, no, S&P said no such thing. You either made that up, or lifted it from some lefty blog.
Here is what they actually said:
“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
“More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
“Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.”
http://abcnews.go.com/Business/standard-poors-downgrades-us-credit-rating-aaa-aa/story?id=14220820
The US is facing $1 trillion+ deficits for the foreseeable future, with no mechanism in sight for halting that spiral. That is why its bonds were downgraded.
Scoutster on August 05 at 7:42 p.m.
Actually, gmorton, there is a mechanism.
The technology exists to close the deficits. What’s lacking is the political consensus to use it.
That will change in the next few months if Obama can capture the discussion. Even if he can’t he will probably win cuz there isn’t a credible opponent.
Remember the “relevancy of Bill Clinton” after the Contract with America? He was toast!
Yeah, that turned out pretty good for Newt and Bob Dole and the gang.
The Tea Party just pushed this economy over the cliff. They will pay.
johnclarke on August 05 at 8:13 p.m.
all this thread was really missing is the other giant blowhard, gmorton. That language specifically states what the problem is, and although I don’t expect ratings agencies to spell out “Tea Party” you would have to be a complete tool to deny the facts. What is it with you people? When will you be satisified, when the country is completely ruined?
DickAdams on August 05 at 9:30 p.m.
Why does hypocrite come to mind when I glance at JC posts? Know it all? And Clarke had the gull to point the finger at hawken as a know it all. lol
gmorton on August 05 at 9:46 p.m.
Scoutster wrote,
“The technology exists to close the deficits.”
It’s not a technology problem; its a political and legal problem. If you’re thinking that Obama’s proposal to repeal the Bush tax cuts on “the rich” is a solution, you’re dreaming – that would produce about $60 billion in revenues annually, against deficits of $1.5 trillion.
We’re way beyond “fixes” of that sort, Scoutster.
“What’s lacking is the political consensus to use it.”
Exactly right. There is no consensus, and there will not be one, no matter who wins the elections next year. The debate is over the proper role of government in a free society. It is between those who believe that role to be protecting each person’s rights to life, liberty, and property, as envisioned in the Declaration of Independence, and those who believe its role to be that of a Perpetual Parent, supplying all the necessities of life to a nation of perpetual, irresponsible children.
Perhaps the Obamas of the country will indeed win the debate. If so, you can expect the productive citizens to take their talents and money elsewhere, as they did in East Germany, Cuba, *et al* in the 1960s.
Scoutster on August 05 at 10:51 p.m.
gmorton..
I’m not arguing with you. By technology I mean taxes.
You are absolutely right that there is a huge debate going on right now as to the role of govt in our lives.
I would characterize the debate differently from you, but I understand your point of view.
I was making an observation, not a criticism. Whatever.
bdr on August 05 at 11:09 p.m.
Has anyone thought why they call it FUNNY MONEY YET?
nslopeofw on August 05 at 11:15 p.m.
You’re on scout. I guess we are on different planes, but i really do think America is waking up to the Obamanator, and the liberal welfare state, and what they have done (or havent done) in the last 2 years.
Why cant we have a balanced budget amendment? Most of the people i know in Spokane, and Alaska identify with what the TEA party was in the beginning, and choose to sacrifice for the country rather than thinking the country owes them something.
Scoutster on August 06 at 7:35 a.m.
10-4 nslopeofw…
Dinner at Churchill’s?
johnclarke on August 06 at 8:21 a.m.
I don’t claim to know everything, Dick. I just know who caused this latest problem. Don’t you? Perhaps you will join the Cons posting here and try to deny the obvious. Why is the balanced budget amendment the most immediate issue? Where was the Tea Party for the last decade? I’ll tell you where, they were sitting by watching a “conservative” spend us and tax cut us into this mess. So the Koch brothers got out the checkbook and suddenly we have a bunch of sociual security and mediceare collecting seniors wearing pointy hats and shouting “socialist!”
Screwing around with the debt ceiling was just plain stupid, and counter productive.
The_Seer on August 06 at 9:27 a.m.
I feel it is important to point out that NAFTA originated with the first Bush presidency.
“Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed it. The agreement then needed to be ratified by each nation’s legislative or parliamentary branch.”
http://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement
nslope: Does Washington state have a balanced budget amendment? Have you read the provisions for the one currently being proposed, that includes stipulations requiring super-majorities to raise spending/revenue beyond certain levels?
The Tea Baggers’ “balanced budget amendment” would make it easier to go to war, impeach a president, or even amend the constitution than it would to raise spending. It is an ideological tract that would never make it through the ratification process. Do you even know what that involves?
gmorton on August 06 at 11:12 a.m.
The_Seer wrote,
“The Tea Baggers’ ‘balanced budget amendment’ would make it easier to go to war, impeach a president, or even amend the constitution than it would to raise spending.”
False on all 3 points. The Amendment makes no change to the war power, it says or implies nothing about impeachment, and does not make it “easier to amend the Constitution than to raise spending.” Raising taxes per the BBA would require a 3/5 vote in both houses of Congress; amending the Constitution requires 2/3 votes in both houses of Congress and ratification by 3/4 of the States.
I’m sure you neglected to provide a link to the BBA in order not to make it too easy to see your claims are false. So I’ll make up for your omission:
http://bbanow.org/news/2011-01-13/common-sense-balanced-budget-amendment-hj-res-1