The Stock Market Melting Down?

The wire services were all a twitter this evening with doom and gloom stories

It was an ugly, ugly session on Tuesday. Which seems strange considering Washington got its act together to pass a debt ceiling deal — with not a day to spare. August 2 was the deadline. And the bill was passed into law August 2. How’s that for cutting it close?

Stocks plunged anyway, with the S&P 500 dropping more than 2.6% in its worst one-day loss in nearly a year. And it caps an eight day 6.7% losing streak for the Dow Jones Industrial Average — the worst run since May 2010, a month which featured the “flash crash” and the panicked start to the euro zone debt crisis.

Investors are reacting to a number of big negatives: The fact the debt bill probably won’t save America’s AAA credit rating, the fact the economy is on the edge of falling into outright contraction, and the fact that the euro zone crisis is spreading like a disease into Italy and Spain.

As a result, significant technical support was taken out, clearing the way for a very nasty and dramatic market meltdown over the next few days.

And various pundits like to parse the specifics of the deal reached and look for winners and losers and apportion blame. Yes, as I’ve mentioned previously, this deal can be soundly criticized for failing to do much of anything, economically. Yes, $4 trillion sounds like a lot, and it is, but that figure is, well, nothing compared to how the debt will continue to grow over the next decade and frankly explode when interests rate rise, as they must and will.

No, I think the reason that the markets have perhaps finally hopped aboard the Train of Doom is that this charade exposed Washington for what it really is: a place that is completely out of touch with the economic realities and perils that it has created, a place whose self proclaimed and media anointed Credentialed Elites have shown them selves to be completely unwilling to be able to honestly recognize and appreciate the depths of the problems they have created, let alone able or willing make the difficult choices necessary to resolve them.

Nothing will be resolved by these people.

The curtain has dropped.

The only thing saving us from complete and total meltdown is that Europe is boned even worse, and China is one big bubble.

We need a new group there who will get us on the path to fiscal sanity and to balanced budgets. That means lower spending and far fewer government workers, programs and regulations as a start.

One Response to “The Stock Market Melting Down?”

1. Ave says:

   August 3, 2011 at 6:24 am

   Real crises exist in the world while we’ve been wallowing in a self-created one. It’s not America’s finest hour and we have only ourselves to blame.