Wall Street exits, stage right, from the United States economy. The Dow closed 513 points down today and is down over 1,200 points since July 21. Both the Nasdaq and the S&P. This is the worst one day drop since October 2008, otherwise known as the great financial Armageddon.
Only three of the 500 stocks in the Standard & Poor's 500 index had gains. Oil fell by 6 percent. The yield on the two-year Treasury note hit a record low as investors sought out relatively stable investments.
All three major stock indexes are down 10 percent or more from their previous highs, a drop-off that is considered to be a market correction. A drop of 20 percent or more signifies the start of a bear market, an extended period of stock declines.
Why? Why now? Many believe it's the absolute embarrassing inability of Congress to solve a problem. Dylan Ratigan verbalizes the sentiment:
Look at what we have received in the past two weeks from our government – the debt ceiling debate was the American lawmakers, President and Congress putting on an illustration for the world about how they intend to solve problems as a group. They exposed their lack of integrity and that fundamental evidence is so repugnant to the investment community. So what the market cares about is not moral judgment…. what they do care about is the inability of the government to solve problems in any context.
Others think it's about economic indicators, all pointing to, at best, an economy that isn't growing enough to create jobs. Yet others point to the never ending inability of Europe to contain their own crisis.
We think it's finally dawning on the green shoots that economic growth which squeezes the middle class will eventually implode. Wealth inequality has already been identified as a major economic problem in the United States, now affecting macro economic growth. If that doesn't convince you, notice consumer spending is now D.O.A.. Americans are plain squeezed like the blood from a stone. They have no more to give.
Worse, the great debt ceiling debackle showed not only how Congress cannot add, but also increases income inequality. Yet, Mr. Wall Street Bail out himself, Tim Geithner is staying as the Treasury Secretary. Obama touts bad trade deals known to reduce jobs as an employment program. He also puts the most notorious offshore outsourcers into the White House.
Meanwhile our Congress can't even get it together to fund the FAA, only recently reaching a deal after America erupted in disgust at their refusal.
Republicans are even worse, touting deficit reductions, which dramatically cut government spending as a jobs program, complete with an agenda to strip what's left of social safety nets for the U.S. middle class.
You cannot grow an economy having a government so bad the entire globe is disgusted, promote multinational corporate lobbyist agendas, cut jobs on a whim to improve your quarterly profit statement and expect something to change.
While main street has known this story going on 30 years, the news finally has traveled to Wall Street and today they voiced their reaction.
Comments
tomorrow unemployment report
One thing I wonder is if some either have the unemployment report or extrapolated the numbers and that's why the crash.
Like everyone else, I expect it to be bad and even potentially negative, but I've been overviewing those reports now for over 3 years and I've yet to see one I jumped for joy over.
Rest assured, anyone reading this, we will be taking the report, calculating out numbers, graphing up all of the major data from it and all of the rest.
I hope I can get the analysis and overviews up as fast as I can, but regardless, we'll be all over the report tomorrow.
Yet Where's the Reaction
It may just be me, but I'm shocked at the apathy of the (wo/)man on the street over this collapse. Maybe they're desensitized, maybe they've already accepted the inevitability of a crash at some point, but it's pretty depressing that they aren't showing any real concern. Thanks for your coverage and breaking down the unemployment reports.
Oh is that what Wall Street realizes?
How about another interpretation on what Wall Street realizes. How about Wall Street realizes that there is nothing that little moral criminal who heads the Federal Reserve wants to do more than print up another mountain of money.
They desperately want the moral criminal to do just that because it means hundreds of billions more of the people's money stuffed into their pockets. But folks are carping about inflation, so they need to help the little moral criminal out with a cover story.
So a nice little manufactured crash so people will start screaming for the moral criminal to "do something," and they know that the "something" will mean more goodies printed into their pockets.
So it's time to manufacture chaos to keep their sugar bowl filled with other people's money. The scam is drying up and they don't like that. Time for the little moral criminal to fire up the presses.
Obama to voters: I'll re-negotiate NAFTA
Obama is a LIAR. He told us voters that he would re-negotiate NAFTA.
Now, of all things, Obama wants more "free" trade deals with Korea and Panama ... at a time when unemployment rate is 10% ... so we can offshore even more jobs and create even more tax havens for corporations and the uber wealthy.
It's simple common sense that these "free" trade deals don't work for Americans. Just look at our high unemployment rate and exodus of manufacturing jobs.
What in the world is wrong with Obama? He's like another George Bush.
Wall Street, schmall street!
Yes, Robert Oak's report is excellent, as usual, but ...
Wall Street, schmall street!
It's called 'global capital' for good and sufficient reasons. I think that the NYSE and all the others are like adjuncts to the currency markets and related precious metals markets.
"Round and round it goes, where it stops, nobody knows."
We can blame it all on Congress. We can blame it all on taxes. We can blame it all on the Fed. We can blame it all on Obama. Personally, I blame it all on the 'WTO' delusional system - what some call "neo-liberalism" and others call "neo-conservatism." It doesn't matter.
Bottom line is that the U.S. -- having resigned national sovereignty -- is no longer King of the Hill. The good news is that nobody else is King of the Hill either.
Nonetheless, there is that steady flow of gold to the top of the hill -- where there is no governance, only a gang of thieves intent on making off with the gold before the angry masses converge in a global lynch mob.
Also, there's still that steady flow of goodies -- not to the top of the hill -- but to the former king and subjects of the former king as though there were still any gold held by the king and the most loyal (most impoverished) of the king's subjects. So the king and the king's subjects continue to pay with IOUs issues by the king. The system would work better if the king's subjects actually believed in their own king and the royal IOUs, because they are all continuing to use the IOUs as their medium of exchange, but the richest of the king's subjects are exchanging the royal IOUs as fast as they can for just about any other kind of paper or electronic virtual paper (although they have become leery of robo-processed mortgages).
It's a confused picture, basically, because the wheel is spinning, with global capital sloshing around in it. Consider news items from the last day or two:
Oil drops below $100, signaling stronger dollar (although long-term it seems like $100 is now almost like a minimum).
Stocks "routed" GLOBALLY and nearly every currency is hammered.
Swiss franc so high that Swiss National Bank cuts rate almost to zero. (Swiss franc has gained something like 35% over the last three months.)
Japan's central bank sells yens first time since March, hoping to curb the increase in dollar-yen ratio.
Although dropping today, the Brazilian real has gained almost 50% over the last three years. Brazil is beset by unmanageable influx of U.S. dollars.
There is talk of a global currency war.
Question: What is global capital chasing today?
Answer: Stability. A sane fiscal environment.
Problem is in the fundamentals. The fiscal environment can only mirror the economic environment, and, more and more, we see that the 'WTO' world system ("globalism") is inherently unstable, even systemically de-stabilizing.
We are caught in the sytemic and global collapse of socio-economic stability under the current 'WTO' world system.
It's all well and good to criticize policies that fail to inhibit the tendency toward labor arbitrage, but historically and essentially, labor arbitrage is the very heart and soul of the WTO system.
U.S. stock markets and U.S. economy are following (adjusting to) long-term trends, not initiating them. Of course, U.S. national leadership is handling all this poorly, and U.S. corporate media is hiding the mess as best it can. That's all to be expected.
Yet no one in our major media or in the Congress dares to criticize underlying premises of the GATT and the WTO. And I cannot dispute Robert Oak's observation that if we upset that apple cart, we're very likely to upset our oil supply, and that spells doom for what is left of a real U.S. economy. That's why we have no choice but to go along to get along ... and also why we welcome any developments that tend to bolster the dollar, despite predictable adverse effects on our balance of trade.
"Round and round it goes, where it stops, nobody knows."
Prof Yamaguchi, Kucinich try talking sense to Congress
This is a link to an article on Prof. Yamaguchi's briefing (July 26, 2011) to such congress critturs as could lend an ear --
HuffPo on July 26 briefing
Sorry that's HuffingtonPost, but let's give the Devil her due! HuffPo is promising both the video and the transcript of the briefing to come!
And, one thing about HuffPo -- there are a lot of readers there!
What, our problems are solvable? Somebody call your congress critturs! And the White House! And your local news room!