Wow. Imagine if There Were No Debt Ceiling Deal

Discussion in 'Politics' started by InTheLight, Aug 2, 2011.

  1. InTheLight

    InTheLight
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    In the now closed thread, "What's the Worst Case Scenario if the Debt Ceiling Isn't Raised" I speculated that the stock market would lose about 600 points and investors would lose about 5% of their 401k values. It's worse than that. There WAS a debt ceiling deal made and the market is not happy. It went down even further than I had thought.


    The stock market is on its longest losing streak since the financial meltdown of 2008, confronted almost every day by fresh evidence that the economy is in serious trouble again.

    The Dow Jones industrials declined more than 265 points Wednesday, their worst day in more than two months, and closed below 12,000 for the first time since June 24.

    During its eight-day decline, the Dow has lost 858 points, or 6.7 percent.


    http://www.google.com/hostednews/ap...7-MdvA?docId=fdc01cbcacd548ad9b3735bf5359178a
     
  2. Havensdad

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    The stock market went down, because the US governments "deal" pretty much guarantees an economic collapse in the near future. I think the stock market would have went down less (since we would never have actually defaulted), had congress balked and said "we are going to live within our means."
     
  3. InTheLight

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    I disagree. I think the markets are going down because there is uncertainty regarding the spending cuts--the market doesn't know if things will be cut, what will be cut, when it will be cut, etc.

    The stock market hates uncertainty.
     
  4. glfredrick

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    More likely the insidious nature of the "promised" cuts. The Democrats scored a huge victory with this bill, especially in tying the cuts (or lack thereof) directly to the military budget!

    All they have to do is drag their feet and the automatic cuts of military spending (the one item that the Constitution says we MUST do!) is automatic. That is the Liberal's dream scenario, and Wall Street realizes that they will drag away in order to cut that spending. The big issue, however, is that military spending drives a LOT of industry that spends other money that drives everything else. The misplaced zeal of the liberals for John Lennon's "Imagine" world has blinded them to the reality of the real world that we inhabit -- a place where REAL enemies would like nothing more than to take over a not-quite-so-real America (any more, since it has been gutted by our current Marxist president).
     
  5. corndogggy

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    This makes no sense, because the cuts are only from pre-planned extra spending in the future. It's not cutting anything. Best case scenario we're still going to pile on another $7 trillion in debt over the next 10 years. Worst case scenario, the Pentagon will simply grow slower than expected, not shrink.
     
  6. glfredrick

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    It will... But, if there is a cut, it will be in defense. Watch.
     
  7. TomVols

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    Investors may be reacting to the deal, but it's also likely that they are reacting to the economic data coming out. With the exception of ADP's better than expected (though, not necessarily macro-indicative) private sector hiring numbers, the economic data is pretty bleak right now.
     

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