“Fear Is Rampant In The Market Right Now”
What a day! And this is only Monday. (Will the bottom feeders come out on Tuesday to peck at the remains?)
What message will this market reaction send to Washington?
Budget talks must be undertaken with the acceptance by the extremists from the Tea Party in Congress that a real dose of compromise which allows for revenue to be added to the final deal is the ONLY way to steady the markets. There is no rational way to get past this dreadful time in America without understanding what has caused this mess.
President Bush and conservative Republicans rammed through the needless tax cuts that were disruptive to the economy. Let us trace backwards and see that the cuts did not work! Republicans foamed at the mouth for war in Iraq and never…NOT ONCE…found a way to pay for it.
Republicans have proved over and over not to understand the foundation of economics. Though they spew a great political line, it is not based in sound reasoning.
Yet it is the tea party groupies that want to make a statement about federal spending and how this is all the fault of President Obama.
S.& P. had warned investors earlier this year that it would act if Congress did not agree to increase the government’s debt ceiling, basically a borrowing limit, and adopt a long-term plan for reducing its debts by at least $4 trillion over the next decade. So analysts were asking why the market was acting surprised on Monday. They suggested that a rash of bad economic news, coupled with the debt ceiling talks over the past weeks and then the nation’s first-ever downgrade, had ganged up and bullied the markets.
“Fear is rampant in the market right now, the fear that we will have a double dip recession,” said Brian M. Youngberg, the energy analyst for Edward Jones. “It is too early to call that, but once the fear bubbles up it can treat the market very harshly.”
Another analyst noted that the market performance in recent weeks was bringing back echoes of the last financial crisis. “The rapidity of the decline and its force now rivals almost anything we’ve seen in the post-war era,” said Dan Greenhaus, the chief global strategist for BTIG, a financial services firm. “We have fallen so far and so quickly that we are up there with the most vicious sell-offs.”
“We can see that this may force the U.S. to move more aggressively to cut spending,” he said, something that could drive the already weak economy into recession and weigh on the economies of all of its trading partners. “That’s the main driver” of the stock market declines, he said.