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US Debt Deal Triggers Record Stock Losses

From an irony proof Washington Post:

Stocks plunge; S&P turns negative for 2011

By Cezary Podkul, Published: August 2

Stocks posted their worst daily decline in nearly a year Tuesday, wiping out the year’s gains and raising fresh questions about the strength of the economic recovery.

Despite the seemingly positive news that President Obama signed the long-awaited agreement to lift the federal borrowing limit, the Standard & Poor’s 500-stock index tumbled 2.6 percent — its seventh straight day of losses, making for its longest losing streak since October 2008. The Nasdaq composite index tumbled 2.7 percent, while the Dow Jones industrial average dropped 2.2 percent.

The declines were the worst in nearly a year for both the S&P and the Nasdaq. They also put the S&P in the red for 2011.

Stocks fell in Asia, where Japan’s Nikkei 225 dropped 2.04 percent in early trading Wednesday. Stocks in South Korea, Singapore and Australia also slumped.

Which is exactly what was supposed to happen if the debt ceiling wasn’t raised. It’s almost as if the news media and the rest of the Democrat Party have lied to us at every turn in the debt ceiling debate.

(By the way, note how there is no mention anywhere in this article that the credit ratings we have heard so much about in recent weeks actually want us to cut spending, rather than increase it.)

Still, can you believe how racist the stock market is? In fact, Wall Street would appear to be a hotbed of racist hostage-taking terrorist Hobbits who just want to sabotage this economy to punish our great President.

Perhaps it is time for Eric Holder to investigate these Wall Street criminals — again.

Analysts blamed the U.S. declines on rising worries over the health of the economy, which has come into renewed focus now that Washington has resolved its months-old fight over the country’s borrowing limit.

Hilarious. You see, despite the need to borrow another $2.4 trillion dollars to keep from defaulting, everybody thought the US economy was as healthy as could be.

“I think the market has been surprised by the economic data, and I think they are becoming more concerned about the economic outlook,” said Paul Dales, U.S. economist at the Toronto forecasting firm Capital Economics…

And here we were thinking that the people on Wall Street get paid so lavishly because they know all about money matters. Instead, it looks like they are always the last to figure things out.

The economic fears are sending investors toward safe havens. Gold, long considered a safe store of value, climbed 1.4 percent to $1,641.90, according to Bloomberg data. And yields on the 10-year Treasury slid to 2.61, a new low for the year. A lower yield means investors are willing to accept a lesser return in exchange for the safety of holding government debt

"The safety of holding government debt"? Apparently, we dreamt all the hysterical news reports over the last few weeks about how the world markets no longer trusted the US government.

You really have to wonder why anyone believes anything they hear from the media. Assuming, of course, that anyone still actually does.

This article was posted by Steve on Wednesday, August 3rd, 2011. Comments are currently closed.

11 Responses to “US Debt Deal Triggers Record Stock Losses”

  1. untrainable says:

    Analysts blamed the U.S. declines on rising worries over the health of the economy
    Where do they get the “analysts”? We blame cockroaches for all the cockroach crap on the kitchen floor. Is someone paying these people?

  2. proreason says:

    Something to keep in mind is that the stock market is not directly tied to the economy. It’s mostly tied to corporate profits, which may or may not reflect the economy. In the long run (i.e., decades) corporate profits will reflect economic growth, but economic growth nowadays is global rather than US-centric. Even so, it is more than clear that in the short run, corporate profits can be good even though the US economy is bad, and, for that matter, the reverse can be true as well.

    Hence, since the marxist initiated financial crisis of 2008, the stock market has done well, even though the US economy has been in a depression. I say depression, btw, because ALL of the so-called growth has been generated by government borrowing (as Vladimir Putin has recently highlighted for us). Without that criminal governmental approach to destroying our lives, the GDP would have been at depression levels since the marxists began their coup. We know this because real unemployment is at depression levels. The so-called “recovery” and all of the bogus unemployment “data” are accounting tricks by the criminals in the bureaucracy…or in other words, lies. The borrowing has simply postponed the inevitable crash until after the Criminal in Chief’s administration. The postponement has happened via the debt accumulation and the infamous QE1,2 and 3. Once the inevitable inflation kicks in, if the marxists still have the country by the throat, the economy will crumble, and even they won’t be able to hide the 10-20% drop in economic output.

    The more probable outcome, however, now appears to be that Republicans will win in 2012. That will probably mean that the economy won’t crumble. But what should have been a 4 to 8% expansion, will probably become a 1 to 2% genuine expansion (in other words, not a tricked up expansion), that will allow the country to survive for another generation, but still leave us seriously weakened economically.

    But back to the stock market. In other words, the stock market is a good indicator, but since it is influenced more by profits than by the economy, and since the genuine relatiionship to the economy often takes decades to reveal itself, saying the economy is good when the market is good is simply not true, or at least, often NOT true.

    Even so, I will be very surprised if the stock market doesn’t skyrocket when Republicans win in 2012. It will probably shoot far far beyond the level where it should be, and cause another crash in 2015 to 2020.

    I am also surprised that the market has done so well since the marxist induced crash of 2008, but I didn’t anticipate the criminal means this adminstration would employ to continue to redistribute your money to their favored corporate money-men. Their ability to steal from you is endless. The theft between 2008 and 2011 is not as big as they were able to accomplish in 2008, but it is still substantial. This time it has been done by holding interest rates artificially low. If you had $100,000 at the end of 2008, by all historical standards, you would have earned about $15,000 on that money. Instead, you have earned less than $1,000 on that money. The remaining $14,000 has gone into the pockets of Goldman Sachs and the other corporate and crime co-conspirators like Citibank, and GE. View it as a theft of about 14% of your assets (not counting the decrease in value of your home which could be much more)….so far. They aim to get the rest when the major crash occurs in 2013. If the Republicans win, that theft will be postponed by about 5 years.

    • JohnMG says:

      …..” (not counting the decrease in value of your home which could be much more)….”

      Forty-one percent in my case. This was supposed to be a hedge for my planned retirement in 2013. As it is now, I couldn’t retire if I wanted to, and I’m retirement-age right now. On top of that, the real estate market is so flat I can’t sell it even at today’s deflated price. I’ve tried. But guess what…….my real estate taxes haven’t gone down any.

    • BannedbytheTaliban says:

      I’m a little more pessimistic than you Pro. I think we are standing on the edge of a worldwide financial collapse brought on by the simultaneous failure of socialist governments worldwide (and yes, the US has become a socialist government). Europe is the tipping point with the Euro about to fall and dollar will not be far behind. For too long the entire economy of the world has been leached upon by big governments who are the guarantors of basic monetary units by which we base wealth. In that regard the stock market is a measure of the link between worthless money, i.e. not backed by anything, and the potential of businesses to make money. The stock market sinking is indicating that the value of economic output will decrease with the devaluing of monies, i.e. they will make money, but the money will be worth less since government is devaluing the currency with debt, printing, quantitative easing, etc. It was only a matter of time since the world went off the gold standard that debt of nations outpaced their wealth and the currencies collapsed. The dollar would have died after the hyper-inflation of the Carter years if not for the fact it was the world’s currency. It is going to take decades to return the world economy to normal, and possibly another global war.

      The worst part is, the more we sink into the economic abyss the more people are going to turn to Marxists to solve their problems with other peoples’ money.

      On a side note, I’m going to predict that this weeks unemployment numbers will unexpectedly rise due to the battle over raising the debt ceiling. Also, last week’s numbers will be revised up over the 400,000 mark.

    • tranquil.night says:

      “I am also surprised that the market has done so well since the marxist induced crash of 2008, but I didn’t anticipate the criminal means this adminstration would employ to continue to redistribute your money to their favored corporate money-men. Their ability to steal from you is endless. The theft between 2008 and 2011 is not as big as they were able to accomplish in 2008, but it is still substantial. This time it has been done by holding interest rates artificially low.”

      Yes. The equities bubble is horribly overvalued, a direct result of the Fed’s greasing the printing presses and wheel-barrowing the free cash over along with the T-Bills they’re all being required to hold. It’s all reflected right now in the Dollar’s historic weakness and the non-stop commodities surge. This is The Big Lie. Like you said, the regime has merely been masking about our circumstances for the past 3 years with non-stop GDP inflating public-sector stimulus, yet the best that was ever pulled was just over 3.4%, and now we’re tipping back under.

      I have always believed they were essentially rigging our financial system to blow again, either knowingly or not (it is possible to know it so I’m hard-pressed to think that EVERYBODY is that ignorant there, and it’s especially suspicious when coupled with all the other world events) like 2008, except now with a lot more in play than loose monetary policy and a housing bubble. There is no trigger for when the panic sets in and everything starts cascading again, other than when the fact that none of this is real becomes unavoidable. At which point they’ll be desperate to blame the greedy bankers and Tea Partiers or something but my God their prints are all over this. This is their economy.

      Is it a plan or is it just the result of fantasyland thinking. Either way, they weren’t “expecting” it to get this bad before the 2012 election.

    • proreason says:

      “I think we are standing on the edge of a worldwide financial collapse”

      I agree with that, but I don’t think it will happen before the 2012 election.

      The world is absolutely waiting for that electiion, which is the most important thing to happen in the world since the US entered WWII.

      One of three things will happen:

      1. Republicans take the Senate and POTUS. If this happens I expect a massive rebound (which will not show as massive as it is because so much has to be overcome), which will allow the world to continue more or less as is for several years or a generation. If the victors in this scenario are dedicated enough, the improvement might be substantial enough to prevent many or most other countries from imploding as well. A rising tide helps all the ships in the harbor. Even in this scenario, however, the long-term fundamental transformation that will be required is so profound that it might be impossible to completely right the ship. It might be just a one-generation reprieve.

      2. Republicans take the Senate and the Marxist retains the presidency. If this happens, it’s a wild card, imho. I hope that the world will then hang on for another 4 years, but the pressures in Europe and the Middle East might be so great that the implosion cannot be prevented.

      3. Democrats hold the Senate and the Marxist retains the presidency. The world will cumble within a year, possibly within 3 months. It will be like the crash of the 5th century when the Barbarians finally realized they could defeat a corrupt and dying Rome, but will happen over a period of a few months rather than several decades.

    • Petronius says:

      “standing on the edge of a worldwide financial collapse….”

      In what may be the most powerful statement ever made by a major American businessman, David Farr, CEO of Emerson Electric, a global manufacturer of automated systems, technology, and products for the energy industry, would seem to agree :

      Farr announced that the company is starting to cut spending as a result of the slowing economy. He said that, in view of the “enormous regulations” being issued out of Washington, “The incentive to invest in the U.S. right now is negative.” Farr cited an environment of waning corporate confidence amid new government regulations, and described the US government as “dysfunctional” and unable to tackle excess debt and spending. “Washington is arranging the chairs on the Titanic the way I look at it.” He added, “I don’t know how much lower the consumer can go.”


      In 2009, Farr said that “Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing. Cap and trade, medical reform, labor rules.” He said that companies will relocate from the United States to create jobs in India and China where they are welcome, “places where people want the products and where the governments welcome you to actually do something.” He added, “What do you think I am going to do? I’m not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs. * * * My job is to grow that top line, grow my earnings, grow my cash flow and grow my returns to the shareholders. My job is not to shrink and roll over for the U.S. government.”


  3. Reality Bytes says:

    I’m sorry, but this sums up what I’m feeling about America.


    They demanded balance

    While we pleaded for the same from Washington’s budgets

    We were scolded for being terrorists

    While they met with them & read others their Miranda rights

    We are told they promise to save trillions over ten years

    While they spend that much & more in less than two

    We’re frowned upon as unreasonable in finding a middle ground

    While their recklessness is sending that ground we live on into the hands of our debtors.

    I am heartbroken more than angry; nonetheless with a resolve to make my stand for the blessing we call America any way that I am able.

  4. proreason says:

    Just took a quick spin through the fy08 and fy11 federal budgets.


    I excluded Defense, Social Security and Medicare. I also excluded “Commerce and Housing Credit” which has huge numbers probably related to TARP, since they include huge offsets which I don’t understand and would throw off the analysis.

    With those provisions, Discretionary federal spending in 2008 was about 1.04T. In 2011 the same is budgeted at 1.54T, a 50% increase EXCUDING the military, SS, Medicare and TARP. This while tax receipts have declined by several hundred billion.

    Repeat, Obamy has increased DISCRETIONARY SPENDING by half a trillion (50%) while tax collections have decreased by nearly the same amount.

    – Education up 50% (it’s for the kids!!)
    – Income security (not SS, mostly unemployment ins) up 59%
    – Dept of Energy up 6000% (how’s that one workin for ya?)
    – Environment up 34% (I’ve already saved 37 cents with the new no-light bulbs)
    – International affairs up 86% (everybody loves us now!!!)
    – General Government up 36% (the poor dears squeeked by for so many years on so little)
    – ps: Military is up 22% (thank goodness we shut down all those wars Bush started)

    You know, I was sitting around the candle fire sharing some crumbs with Ms Reason after the marxist induced financial crisis threw us into poverty and we were sayin “Gee, if we could just increase government spending 34 to 6000% while the income of the rest of the country plumets and millions of people are thrown out of work, it will all be worth it”

    And guess what…..it happened.

    But now the Tea Party Terrorists have reduced all of that by .0001%, maybe, if they go to Washyourbackington with pitchforks.

    One thing for sure, we got change.

    • Reality Bytes says:

      Way to go Pro! Your basic math skill is sorely needed.

    • proreason says:

      Update, I played around with the numbers for a while. The problem is even more serious than I thought.

      Just to keep the debt at current levels as a % of GDP, you have to return the Discretionary AND Military budgets back to FY 2008 (about a $600B reduction)…….AND…..somehow hold Medicare increases to 5% for 5 years and then 3% after that….AND…..assume a spirited recovery that would get tax receipts back to 2008 in 2 years (impossible under Obamy). That leaves SS intact, and also pays interest on the debt (but with pretty agressive interest rate assumptions).

      To erase the debt, I can see that Discretionary spending would have to be returned to the level of the early 2000’s and either Medicare be gutted, the military be gutted, or an economic recovery would have to occur at Reagenesque levels.

      I would have to see “the penny plan” that Rand Paul talks about. I can’t make that work in 10 years, even assuming a 1% reductiion in the entire budget for 10 years, including SS and Medicare. With my model, you have to go to across the board 10% reductions to eliminate the deficit. I’m pretty sure the penny plan reduces SS and Medicare anyway, which would be disastrous. For example, a real 1% annual reduction in SS payments for 5 years would reduce a Seniors income by nearly 20% vs inflation. Since so many are totally dependent on SS, that would be an unacceptable disaster. Granmas would die.

      The bottom line is that people are right. Medicare has to be RADICALLY changed for this country to become financially solvent. Even eliminating the military wouldn’t do it without changing Medicare.

      The good news is that it can be done if we win in 2012.

      This chart is also interesting. The Moron’s deficits as a % of GDP are twice as large as every post-WWII year with the exception of one Reagen year, in which he only exceeds by 2/3. The deficit in the Moron’s best year as a % of GDP is 2.5 times larger than Bush’s worst year.



      So much more electable than facts, math and common sense.

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