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Now you tell us

Races for the Senate, U.S. House, etc. and other issues of national importance.

Now you tell us

Postby kurt_w » Wed Aug 03, 2011 1:09 pm

Well, this is just plain pathetic. From the LA Times, by way of Kevin Drum:

Stocks Sink As Market Fears Mount
Investors are spooked by the prospect of even modest bederal budget cuts in an anemic recovery

Two years after the last recession ended, Wall Street is showing rising fear that the U.S. economy could be headed for a new downturn....Despite some relief that Washington could forge an eleventh-hour compromise on the debt ceiling, analysts said the prospect of even modest federal budget cuts in an anemic economy was spooking markets.

"Investors are looking past the budget situation and realizing this is an austerity plan," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "We have an economy that's struggling to stay afloat and we don't have the ammunition to keep prodding it forward."


Everybody wants tax cuts, and everybody wants a balanced budget. Well, guess what -- you can only get both by cutting spending. And cutting spending in a weak economy will plunge us back into recession. I'm not sure exactly why the "investor community" is only thinking this through now, when it's too late.

For some time now, being a progressive has basically felt like being Cassandra. Nobody listens to you until after things have all gone to hell in a handbasket and it's too late. It's a role I for one am getting tired of, but apparently we're going to have to reprise it yet again.
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Re: Now you tell us

Postby Michael Patrick » Wed Aug 03, 2011 1:20 pm

C'mon Kurt, everyone knows that tax cuts increase revenue.
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Re: Now you tell us

Postby DCB » Wed Aug 03, 2011 1:32 pm

No one could have predicated this.
(except for the dirty hippies like Krugman who have been saying this for months, or years if you go back to his advice on the stimulus)
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Re: Now you tell us

Postby Ned Flanders » Wed Aug 03, 2011 2:04 pm

"Spooking". That sounds racist.
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Re: Now you tell us

Postby rrnate » Wed Aug 03, 2011 2:07 pm

Ned Flanders wrote:"Spooking". That sounds racist.


With brain power like this, America is going to pull itself up by it's bootstraps and walk tall once more.
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Re: Now you tell us

Postby kurt_w » Wed Aug 03, 2011 3:06 pm

rrnate wrote:
Ned Flanders wrote:"Spooking". That sounds racist.


With brain power like this, America is going to pull itself up by it's bootstraps and walk tall once more.


... then fall flat on its face 'cause it accidentally tied its bootstraps together.

Which is kind of the point of this thread.
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Re: Now you tell us

Postby scratch » Wed Aug 03, 2011 3:41 pm

Ned Flanders wrote:"Spooking". That sounds racist.


There you go, Neddy, outperforming Blaska again.
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Re: Now you tell us

Postby green union terrace chair » Wed Aug 03, 2011 4:25 pm

Not all "analysts" agree and "the market" is not a cohesive entity that responds rationally, instantly, all in the same direction to every event.
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Re: Now you tell us

Postby pjbogart » Wed Aug 03, 2011 9:07 pm

I'm becoming increasingly convinced that America is basically like an alcoholic who will not be serious about making lifestyle changes until he hits rock-bottom. Maybe we need another great depression. Maybe your average "Tea Party Patriot" won't come to terms with their illness until they're standing in a breadline. Maybe your average "job creator" won't realize that they've overfished the middle class until they have no one left to sell their product to.

You know what? Keep watching your FoxNews. Keep spewing the propaganda you read on The Free Republic. If the crash is inevitable, let's do it now so we can get started fixing it.
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Re: Now you tell us

Postby bdog » Wed Aug 03, 2011 9:33 pm

Agreed PJ, with the caveat that your "Tea Party Patriot" could just as well be a "progressive".

"All good things must end"

Get ready for it folks.
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Re: Now you tell us

Postby kurt_w » Thu Aug 04, 2011 8:10 am

green union terrace chair wrote:Not all "analysts" agree and "the market" is not a cohesive entity that responds rationally, instantly, all in the same direction to every event.


Quite right. There are lots of other things going on that might give investors pause right now, like the potential for a much, much, much worse crisis in the Eurozone.

But I find it darkly amusing that for months the primary story in the media seemed to be "The deficit is out of control, we've got to tighten our belts, and the only question is whether that should that be done by only spending cuts or mostly spending cuts with a few token tax increases" ... and it's only now, after the vote, that suddenly there have been a whole series of reports (not just this LA Times one) that basically say "Oh, by the way, cutting spending when the economy is dead in the water and people are out of work might actually make things worse rather than better."

Bad economic times tend to promote a kind of social madness or dysfunctional thinking. The teabagger movement is one manifestation of that. Unfortunately the media generally don't (can't, or won't) point this out until after the fact. It's a lot like the post-9/11 period and the runup to the Iraq war. When a large and vocal fraction of the population runs off the rails, the media tend to follow them.
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Re: Now you tell us

Postby snoqueen » Thu Aug 04, 2011 10:03 am

Maybe your average "job creator" won't realize that they've overfished the middle class until they have no one left to sell their product to.


Well put.
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Re: Now you tell us

Postby bleurose » Fri Aug 05, 2011 11:33 am

I'm sorry, did the "recession" end while I wasn't paying attention? And two years ago? What fairy tale are these analysts living in? Or perhaps I have the context wrong - it was the recession for Wall Street that ended two years ago, not the recession the rest of us are still smack in the middle of!
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Re: Now you tell us

Postby green union terrace chair » Mon Aug 08, 2011 1:31 pm

bleurose wrote:I'm sorry, did the "recession" end while I wasn't paying attention? And two years ago? What fairy tale are these analysts living in? Or perhaps I have the context wrong - it was the recession for Wall Street that ended two years ago, not the recession the rest of us are still smack in the middle of!

Using some standard indicators, many experts would say that the recession has ended, that we are in a very weak recovery and in danger of a double-dip recession. Others (myself included, though I'm no expert) would say that not all recessions are identical, we are not in recovery and the recession is still going strong.

kurt_w: I wanted to add in response to your initial post ... while there's a lot of great economic reporting out there, there's also a lot of shitty reporting that is really just thinly-veiled (and poorly-thought out) commentary. The markets go up or down in a day and some reporter combs the day's headlines to see which one in his mind correlates with the market action, then attributes that action as a direct response to the headline. It's very facile and ignorant of the incredibly textured and diverse international markets and what various investors and entities are reacting to at any given moment in time.

You're also right about elements in the media and how they get caught up in the moment. Compare the headlines and note the dates in this image link ... so often you see headlines that capture what is happening at the moment and state that it will always be so, change is impossible and either the party or the funeral will never end.
Image
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Re: Now you tell us

Postby kurt_w » Mon Aug 08, 2011 2:35 pm

Surely I'm not the only one amused by the headlines this afternoon:

Treasury yields drop most since May 2009
S&P’s downgrade of U.S. debt raises appeal of safe-haven assets

By Deborah Levine and William L. Watts, MarketWatch

NEW YORK (MarketWatch) — Treasury prices rose on Monday, pushing 10-year yields down the most since May 2009, as investors pulled funds out of stocks and most commodities and sought the liquidity and traditional safe-haven status of the U.S. debt market after the country’s credit rating was downgraded.


Translation: After a major credit rating agency declared that US debt is no longer as safe an investment as it was last week ... investors rushed to buy US debt.

What a bizarre situation we find ourselves in. Given all the veto points in our system of government, it's not possible to run the country without at least a modicum of bipartisan consensus or at least compromise. But one of the two major political parties has turned pathological.

This is what the S&P thing was all about. What S&P was really trying to say is "You fucking radicals who have taken over the GOP are endangering the 230-year-old system on which our nation's wealth has been built." But S&P isn't allowed to say that. So they do this coy downgrade.

And Wall Street responds by buying US Treasuries, which would make no sense if you believed that the downgrade was an actual sign of no confidence in US debt ... but makes perfect sense as long as you understand the downgrade as a vote of no confidence in the economic prospects for a society whose government is being held hostage by teabaggers.

The world is virtually rushing to buy US debt because nothing else seems safe. We should be spending more and putting people to work now. But that's not going to happen because of our political gridlock. So ... no economic growth, continued high unemployment, and further immiseration for the country as a whole.

How do you fix a broken political system ... without breaking it further? Particularly when large swaths of the population have only a vague sense that it's broken, without understanding how or why?
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