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AFP: Stocks Plummet 1.6% Over Debt Limit!

From those shameless fear mongers at the Agence France-Presse:

Plummeting stocks amid US debt default jitters

by Olivier Knox
July 28, 2011

WASHINGTON (AFP) – Spurred by plunging stocks and fears of global economic crisis, polarized US lawmakers called a key vote for Thursday and privately hunted for a compromise to avert a default on the country’s debt.

Jittery stocks plummeted Thursday amid fears of global economic crisis, as President Barack Obama and his Republican rivals bickered over competing plans to avoid defaulting on US debt.

Is Mr. Obama bickering? We didn’t even know he had offered a plan.

Asian markets followed Wednesday’s big losses on Wall Street, as next week’s deadline approaches for US lawmakers to strike a deal to avoid a disastrous default.

Among the big losers, Tokyo on Thursday was 1.12 percent lower in early trading, while Hong Kong fell 0.95 percent and Sydney 1.23 percent

What hysteria. Since when are 1% losses "big losses"? Even Wall Street’s drop of 198 points is quite modest compared to the 700+ point drops that were common during the fall of (election year) 2008.

But the fear isn’t going to monger itself.

Worried global markets feared the stalemate’s possibly disastrous effects on the world economy, with US stocks dropping for the fourth straight trading session while investors seeking safe haven briefly sent gold to a new record.

And even a breakthrough deal to lift the debt limit might not spare the United States from losing its sterling Triple-A debt rating, a downgrade that could raise interest rates across the already ailing US economy, analysts said.

"There has to be a credible plan to reduce the debt burden as well as the deficit levels," said Standard & Poor’s president Deven Sharma.

So why isn’t the lack of spending cuts blamed for the jittery markets – rather the the lack of a debt ceiling increase? In fact, the debt ceiling increase would just seem to exacerbate the problem.

US stock markets sank and Treasury bond prices fell slightly under the weight of the stalemate, with the Dow Jones Industrial Average down 1.6 percent and the Nasdaq diving 2.7 percent

Again, these are not big drops. This is the news media trying to stamped the Republicans into making a bad deal, when they hold all the cards.

If there is no deal, the United States, still recovering from the 2008 recession with unemployment hovering around 9.2 percent, would have to cut spending by some 40 percent, setting up a choice between debt payments and programs like government benefits for the poorest, most vulnerable Americans

What media bias? Even so, wouldn’t the financial markets cheer spending cuts of 40%? They would certainly be credible. Wouldn’t this be the absolutely best outcome of all?

Of course doing that would hurt "the poorest, most vulnerable Americans." But doesn’t everything?

This article was posted by Steve on Thursday, July 28th, 2011. Comments are currently closed.

2 Responses to “AFP: Stocks Plummet 1.6% Over Debt Limit!”

  1. untrainable says:

    Republicans believe that tax cuts will grow the economy. That getting out of the way of the private sector and letting the economy and the capitalist system work the way it’s supposed to will be good for everyone.

    Democrats believe that government spending and the STATE centralized control will create jobs and grow the economy.

    Though these would seem to be polar opposites, democrats have given Republicans an in on their side. In an effort to muddy the waters and fill their supporters with misinformation democrats have proclaimed that tax cuts = government spending.

    So what’s the problem? The solution is obvious. We can save the economy with more “government spending”… in the form of radical tax cuts. I’m sure, using democrat math, that the Republicans can in one feld swoop save the economy from total implosion AND hang the democrats with their own lies.

    We need to start using democrats words (lies) against them. There is plenty of rope already, but so far they’ve refused to hang themselves. I say let’s give ’em a hand.

  2. Right of the People says:

    “If there is no deal, the United States, still recovering from the 2008 recession with unemployment hovering around 9.2 percent, would have to cut spending by some 40 percent, setting up a choice between debt payments and programs like government benefits for the poorest, most vulnerable Americans…”

    What’s the big decision here? I’m sure I could find at least 40% to cut that wouldn’t even touch their precious entitlements although they’d be some of the first I’d cut. There are a plethora of agencies we don’t need. Maybe the dead wood would actually look for work if they want that new 66″ plasma TV and X-Box.

    Sure in the beginning it would raise the unemployment rate to over 10% but we’ve been there done that and the country is still kicking. Eventually when the ex-government employees figure out that they aren’t getting their jobs back and their unemployment bennies are about expire, they find something even if it means having to learn the phrase, “You want fries with that?”


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