BOOM! There goes the market!

Well, we knew it was going to happen. The market has started a downward slide again based on a wide range of economic indicators. The debt ceiling debacle was embarrassing but it kept the analysts focused on a single problem. Once that issue was temporarily addressed, the analysts took a look around and realized the whole economy is in the shitter.

So... down, down, we go.

At the same time, Panetta is saying we should raise taxes to avoid cuts to the military. WTF? What a moron. We should cut the military in half and retool it for modern challenges, in my opinion.

I think we could be on the brink of a Soviet-scale collapse. We're out of money, our economy is a mess, and our leadership is completely broken on both sides. Leadership has been corrupted by personal and business agendas. An election is looming and that will drive government to do what is popular, not what is needed.

Anyone else feeling more optimistic than me? I could sure use some cheering up.

Good luck to us all,

L4L

This was a shitty day. It started in Europe and then hit some technicals in the USA. It's a shame because corporate America is turning in great earnings numbers, but they're being wasted on bad economic forcasts. Panic.

Being the dumbass I am, I did buy some last week and then today at the close. I bought good companies at what I perceive as a value. A lot is riding on job numbers tomorrow, and I'm keeping everything crossed for money coming back in the market.

Four things have to get better.
1. Italy and Spain debt plan...hell most of Europe.
2. Jobs Jobs Jobs.
3. A unified plan from our government on the debt so that corporate America will know
what the hell to do with their business plans.
4. Smaller government so that capitalism can do it's thing.

Lust, to quote Taggart in Blazing Saddles; "I am dee-pressed". 'Course he was only talking about integration.

Coupling the debt ceiling debate with deficit reduction, would in retrospect, seem to have been a bad idea. Of course, all might have turned out ok if reasonable minds had had reasonable discussions.

Since both sides of the aisle had increasingly narrow points of view among their caucuses, I don't see much hope for the Super Panel, or whatever they're calling it. These, hopefully, reasonable minds will be over come by the same idealogues that hijacked the deficit talks.

Erskine Bowles of the Gang of Six calls the US economy, "the healthiest horse in the glue factory".

Patrick Moynihan used to say, "every one is entitled to their opinion, not their own facts".

Not much levity in me today.

Beach

US credit rating downgraded. Bend over and get ready for what's going to happen on Monday.

S&P was clear on the reasons for the downgrade... Both parties are to blame:

1. The skyrocketing deficit under the Bush administration.

2. The failure of the Obama administration to take aggressive reform actions.

3. The failure of the Republicans to accept that increased revenue is required. Specifically mentioned was the failure to eliminate personal and corporate loopholes.

4. The fact that Washington couldn't resolve the debt ceiling crisis without the pressure of a deadline and that it took until the last day to avoid defaults.

5. The debt ceiling deal was not aggressive enough.

6. General lack of confidence in the governance of the nation. I couldn't agree more.

We need to get rid of Republicans and Democrats and bring back Conservatives and Liberals.

3. A unified plan from our government on the debt so that corporate America will know
what the hell to do with their business plans.
4. Smaller government so that capitalism can do it's thing. Originally Posted by cookie man

Actually, at least in the short term, those two things will have a negative effect on the economy. We need government spending right now, not retrenchment. But we're obviously not going to get it with the TeaNuts in charge of one of the two houses of Congress.

I foresee a very significant double dip recession, largely on account of the deficit deal. Depending on the reaction to this recession, we could easily spin into depression.

I've moved quite a bit of my portfolio into cash and am wondering if I shouldn't move more. To the extent that I've kept equities, I've tried to pare back more on U.S. equities so as to move my 55/45 U.S. to International stock ration a bit higher. I'm also keeping my non currency hedged German and emerging market bonds ETFs and am slowly easing out of U.S. municipals.

Read an interesting interview with Warren Buffet this morning talking about the US credit rating downgrade.

He believes it is not justified at all, that the US can pay back it's debt 100% of the time, any time it wants.

His reasoning, and it's something I have never really thought of before, is that all of our debt is owed in US currency so if we ever have to pay it back, we just print more. Destructive hyperinflation, but we always have the ability to pay it back. That's why any talk of using anything other than US dollar would destroy us.

Interesting angle on it anyway, and he believes the rating downgrade won't have much impact. Guess we'll see.

That's also why I am extremely afraid of cash right now.

Remember this is the same Standard and Poors that gave all the bad mortgage bundles such high ratings.

Read an interesting interview with Warren Buffet this morning talking about the US credit rating downgrade.

He believes it is not justified at all, that the US can pay back it's debt 100% of the time, any time it wants.

His reasoning, and it's something I have never really thought of before, is that all of our debt is owed in US currency so if we ever have to pay it back, we just print more. Destructive hyperinflation, but we always have the ability to pay it back. Originally Posted by mansfield

He is absolutely correct. This is the classic way countries get out of onerous debt. They devalue their own currency. Indeed, this is the very problem that members if the EU, like Ireland, who have a common currency are facing. And it is why the UK refused to join the Euro group of the EU. Old news, but a fact well worth keeping in mind.

Actually, at least in the short term, those two things will have a negative effect on the economy. We need government spending right now, not retrenchment. But we're obviously not going to get it with the TeaNuts in charge of one of the two houses of Congress.

I foresee a very significant double dip recession, largely on account of the deficit deal. Depending on the reaction to this recession, we could easily spin into depression.

I've moved quite a bit of my portfolio into cash and am wondering if I shouldn't move more. To the extent that I've kept equities, I've tried to pare back more on U.S. equities so as to move my 55/45 U.S. to International stock ration a bit higher. I'm also keeping my non currency hedged German and emerging market bonds ETFs and am slowly easing out of U.S. municipals. Originally Posted by TexTushHog

was it not bo's spending trillions that got us in this mess?

was it not bo's spending trillions that got us in this mess? Originally Posted by cptjohnstone

Not by any stretch of the imagination. It was Obama's spending that kept us out of a second great depression. Indeed, had Obama had any balls -- I know, a laughable "what if" for any Democrat now -- and had 1) the stimulus been big enough; and 2) had half of it not been wasted on tax cuts, we would be back on track now. But if a frog had wings, he wouldn't bump his ass when he jumped.

But back on topic, it was 1) 30+ years of Republican (and to a lesser degree Democratic -- see Glass-Stegall) deregulation, 2) two unfunded Republican wars of choice, 3) a Republican designed and unfunded Medicare prescription drug benefit (the first unfunded entitlement in American history), 4) a 30+ year program of government driven redistribution of wealth upward, and 5) most of all Bush's irresponsible and immoral tax cuts for the rich that got us in this mess.

How quickly people forget.

How quickly people forget.

Yes, how quickly some forgot those 8 years of Bill Clinton and his contributions to the mortgage product collapse.

There is plenty of blame to go around, you can't place any more on Repubs than on Democrats.

Actually, you can place a lot more on the Republicans. But you are correct. Clinton signing Glass-Stegall was unforgivable.

And let's not forget the roll of ridiculously low taxes. The U.S. now pays almost the lowest taxes in the developed world. And our income taxes are at a 60 year low. The reasons taxes don't seem to be particularly low to the average tax payer is that all the cuts of any size have been to people who have high six figure incomes and above.

Here is the chart that shows the relative impact of the downturn (much more Bush's fault than Clinton, by any measure) versus the War's, Bush's tax cuts, etc.



Just ending the wars and the tax cuts alone would all but solve the problem. Then take a meat ax to the Pentagon budget and raise some tax revenue on upper income tax payers and it's solved.

An article on this very subject being rerun this morning (originally published in late April) in the Washington Post.

http://www.washingtonpost.com/busine...rNF_story.html


Polls show that a large majority of Americans blame wasteful or unnecessary federal programs for the nation’s budget problems. But routine increases in defense and domestic spending account for only about 15 percent of the financial deterioration, according to a new analysis of CBO data.

The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts. . . .

All told, Obama-era choices account for about $1.7 trillion in new debt, according to a separate Washington Post analysis of CBO data over the past decade. Bush-era policies, meanwhile, account for more than $7 trillion and are a major contributor to the trillion-dollar annual budget deficits that are dominating the political debate.

was it not bo's spending trillions that got us in this mess? Originally Posted by cptjohnstone

No, dumplin,' it wasn't - regardless of you and your bro's penchant for revisionist history.

But, thanks, TTH, it's nice to see that we're closing in on Chile and Mexico regarding tax rates. And, we've got the infrastructure to prove it.