US Stocks Down 15% in 2 Weeks

[J. J.]

And thank you President Obama for providing this leadership to new depths.

[J. J.]

The reason stocks are down 15% is because the economy is terrible, and the economy is terrible because Republicans have forced the conversation to unnecessary austerity which is just making the economy worse instead of the very necessary trillions in immediate Keynesian deficit spending. Of course Obama is partly responsible for buying into their framing, but the GOP does effectively control the legislative branch.

The GOP has one House, and who is calling this "unnecessary austerity."  It is necessary austerity, and the economy is reacting to the lack of it.

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When did Obama switch parties?

[J. J.]

And thank you President Obama for providing this leadership to new depths.

Yes, Obama's leadership can be blamed.  But what about the GOP's unwillingness to raise taxes? We got into this mess due to tax cuts and we have to get out of it by slowly raising the tax rates back up. If anyone thinks we can escape the mess without raising taxes, they don't deserve to be in Washington. Those people are completely naive and unwilling to face reality. (and yes the Dems who won't cut Medicare are the same, but they aren't so powerful, are they now?)

Who is disagreeing?  I think part of this increasing income taxes.  I think it takes someone to do both.  I'd be willing to give Obama a pass on being a tax and spend liberal if he wouldn't do the spending part.

[J. J.]

And thank you President Obama for providing this leadership to new depths.

Yes, Obama's leadership can be blamed.  But what about the GOP's unwillingness to raise taxes? We got into this mess due to tax cuts and we have to get out of it by slowly raising the tax rates back up. If anyone thinks we can escape the mess without raising taxes, they don't deserve to be in Washington. Those people are completely naive and unwilling to face reality. (and yes the Dems who won't cut Medicare are the same, but they aren't so powerful, are they now?)

Who is disagreeing?  I think part of this increasing income taxes.  I think it takes someone to do both.  I'd be willing to give Obama a pass on being a tax and spend liberal if he wouldn't do the spending part.

Dude Obama already agreed to huge spending cuts, and has been more than willing to cut taxes (idiotically, of course). I don't see how he is a tax and spend liberal (even the stimulus only increased SPENDING by about $600 Billion).Right now it's the GOP's turn to step up and be willing to raise taxes. I think a 2:1 or even 3:1 ratio of spending cuts to tax hikes would be reasonable. It's absolutely ridiculous the GOP couldn't even agree to that.

You don't hear me praising the GOP for holding the line on taxes.  I'm basically saying if Obama would come forward with serious cuts and said, "and we have to raise income taxes," I'd agree.  The only thing would be to cut capital gains taxes, in order to stimulate the economy, even a temporary cut.

We need austerity, but that included revenue increases.  (And yes, I'm emphasizing the fiscal in fiscal conservative.)

[J. J.]

And thank you President Obama for providing this leadership to new depths.

The Republicans did it.

Wow, I had no idea Obama was a Republican.  Was that in the papers?

[J. J.]

And thank you President Obama for providing this leadership to new depths.

The Republicans did it.

Wow, I had no idea Obama was a Republican.  Was that in the papers?

Obama had nothing to do with it.

So, if Obama has no role in legislation, we should elect someone who will. 

That is basically your choice, either Obama made some mistakes that he has to fix, or he just isn't up to leading the country.  Sounds like, shall I say it, Jimmy Carter.

[J. J.]

Say you get paid $55,000 in 2011.  And you get paid $55,000 in 2012.

You go out and buy $55,000 worth of groceries in 2011.  You inventory them.

Then you go and buy $55,000 worth of groceries in 2012 after a 5% inflation in foodstuffs prices.  You inventory them.

You find you have 5% less food than in 2011.

Only in the mind of a hack Republican is that not a cut.

It is not a cut as much as it is devaluation of your money.  You $55 k is now, presumably less of a percentage of the GDP, which is good in this context (unless GDP contracts).

(I kind of agree with you, but this is a really bad analogy.)

[J. J.]

Massive rush into gold @1744

It's falling back Beet, 1742 and it was up higher than 1744.  It's a reaction to the Asian markets.

The Kospi is now down 8.5%. It is now down 18% in two and a half days. This is shaping up to be the worst crash in human history-- even worse than 2008.

Excessive hyperbole.  

Dow Futures are down 291.  I would not be surprised if we'd lose a digit.

[J. J.]

Massive rush into gold @1744

It's falling back Beet, 1742 and it was up higher than 1744.  It's a reaction to the Asian markets.

The Kospi is now down 8.5%. It is now down 18% in two and a half days. This is shaping up to be the worst crash in human history-- even worse than 2008.

Excessive hyperbole.  

Dow Futures are down 291.  I would not be surprised if we'd lose a digit.

We are about 7% away from being worse than the worst week of 2008 for the S&P 500. And that was followed by a 1,000-point rally.

You don't have the structural problems you had in 2008, but you have Obama performing worse than G W Bush.

Dow will close below 10,000 at some point.

[J. J.]

Obama needs to do something. Anything. Standing up and saying that the U.S. is still a AAA Country isn't going to cut it. He needs to propose something. Heck, it could be a $2 trillion stimulus/jobs program. I know it wouldn't have a 1% chance of passing Congress but that isn't the point. History will judge harshly a leader who doesn't at least attempt to 'lead'. Obama just looks like a deer in the headlights. 

He has proposed things the GOP has previously signaled openness to (a payroll tax holiday, infrastructure bank, new free trade agreements to spur job growth).  You may not love those ideas and it doesn't matter since the GOP will fight whatever he proposes.  He's also tried to calm any jitters from the downgrade by saying he'll be offering proposals to the Super-Committee and has threatened to veto any extension of Bush tax cuts that includes the wealthiest if there's no revenue in the SuperCongress deal (which circumvents a specific problem S&P had, even if it doesn't change the larger problem of partisan gridlock and the GOP taking the debt ceiling hostage).  I'd argue he is leading but if Republicans won't follow, they can't be forced.  The president is, by design, limited in what he can do legislatively.  And certainly in how he can affect the economy.

I think they will, but not it the "change" consists of policy that have not worked for 40 years.

[J. J.]

Obama had nothing to do with it.

So, if Obama has no role in legislation, we should elect someone who will. 

The President never has any role in legislation, J.J. - he's from the executive branch you see.  The Legislative Branch is the Congress.

Ever hear of a veto?

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The policy of the last 40 years has been neo-liberalism, and it is neo-liberalism which has failed.  Keynesianism has been abandoned for that same period, and this is precisely why we are now in a depression.


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You are looking at a recycled police of government spending.  It has failed (though QE 1 did work).

[J. J.]

The President never has any role in legislation, J.J. - he's from the executive branch you see.  The Legislative Branch is the Congress.

Ever hear of a veto?

The veto would have led to precisely the same collapse.  The only way to avoid the depression was for the Republican congress to raise taxes upon the rich.

So Obama had the power, but lacked the leadership to use it.

Yes, there are two things, in tandem, to solve the fiscal problem, cut spending and raise revenue.

Does anyone know what percentage of revenue capital gains and corporate taxes bring in?

[J. J.]

The veto would have led to precisely the same collapse.  The only way to avoid the depression was for the Republican congress to raise taxes upon the rich.

So Obama had the power, but lacked the leadership to use it.

No, he had no power at all.  He could accept the House's madness, and have a depression, or veto and have a depression.  It is the same either way.  He had no power at all to change anything.

Yes, there are two things, in tandem, to solve the fiscal problem, cut spending and raise revenue.

Actually a more responsible economic program - and one which would have lead to a more secure AAA rating - would be to increase both spending and taxation.

You were not paying attention in class were you.  The spending was what lowered the rating.

[J. J.]

Regardless of whether or not one thinks the root cause of all the problems in the American economy is Neo-Liberalism, it doesn't change the impact which oil prices have on the economy and the thus need to do something to diversify, achive energy independence, or whatever you want to call it.

That would help, but oil is not the problem today.

[J. J.]

Er... I seem to remember that the last time we raised taxes and thereafter had a surplus, the Republicans spent it all on wars and pointless tax cuts for the rich that have resulted in our current debt problems.

And then the Democrats borrowed and spent that it on a stimulus and the start of Obamacare.  We can see how well the stimulus is working from the title of the thread.

[J. J.]

Dow Plunges another 500+ points today......glad I'm not retired.

It's down about 700 points for the week, which sounds a bit better.  It is just hugely volatile.

[J. J.]

Our downgrade has everything to do with Obama massively increasing spending while cutting taxes.
 

Seriously?  Obama was responsible for about $1.44 trillion vs Bush's $5.07 trillion.  Heck, the Bush tax cuts alone cost us $1.8 trillion.

Multiply that  $1.44 trillion by four.  Bush had eight fiscal years, Obama's had two.  S & P also pointed that out.

You have to increase revenue and cut spending (I'd say cut more of the latter, as that obviously didn't work).

[J. J.]

Multiply that  $1.44 trillion by four.  Bush had eight fiscal years, Obama's had two.

During recessions spending automatically increases, J.J.

Ever hear of the Keynesian Endpoint?

[J. J.]

Ever hear of the Keynesian Endpoint?

Why would I hear of some nonsense coined a year ago by an idiot?

Actually first approached in the mid to late 1930.  Make sure you send a thank you note to Hitler for not getting there.

[J. J.]

Ever hear of the Keynesian Endpoint?

Why would I hear of some nonsense coined a year ago by an idiot?

Actually first approached in the mid to late 1930.  Make sure you send a thank you note to Hitler for not getting there.

Hmm... ok.  So you're saying WWII wasn't Keynesian?

I doubt if Hitler was a Keynesian.  Even in the 1930's the the government didn't have enough resources to get the US out of the Depression.  It takes the private sector to solve the problem.  A lesson learned by, Russia, China, Eastern Europe, but not you.

Perphaps Obama understands the point as well.

There was another comment about TARP; at least 80% of the money has been repaid.

[J. J.]

Hmm... ok.  So you're saying WWII wasn't Keynesian?

I doubt if Hitler was a Keynesian.  Even in the 1930's the the government didn't have enough resources to get the US out of the Depression.  It takes the private sector to solve the problem.

Um, I hate to break it to you, J.J., but the 'resources' of the 'private sector' are available to the government - through the obvious expedients of taxation, nationalization, etc. 

The point about World War Two was that it represented a government takeover of the 'private' economy, which is what solves depressions.

FDR realized he couldn't win World War II without the private sector (and pissed off a number of New Dealers in the process).

[J. J.]

FDR realized he couldn't win World War II without the private sector (and pissed off a number of New Dealers in the process).

But you do realize that economic activity was only created by government fiat, government order, government contract, don't you J.J.?  Had their not been a WWII there would never have been an escape from the Depression, and there would never have been the post-war halcyon days.  Just as we will never leave behind the current deflation/depression if we do not abandon laissez-faire capitalism and return to a high level of State guidance and redistribution.

The government did not create the market for the products.

[J. J.]

The government did not create the market for the products.

The products were bombs, tanks, airplanes, and ships.. who were they selling them to?  Teenagers?

To some extent, the UK and Russia.

[J. J.]

If by "end" you mean returned unemployment to exactly pre-1929 levels then, on the basis of that remarkably limtied definition, you are correct. Unemployment had, however, declined dramatically from the month FDR took office until Dec. 1941, at which time unemployment was not far above pre-depression levels. In fact unemployment probably would've reached that level had FDR not ignored his Keynesian advisers and impose austerity measures which directly led to the 1937-39 recession.

Some of that might have been the "Arsenal of Democracy" effect.  12 months before, America was selling to the increased demand.

Keynesian policies may a diminishing marginal utility effect when it comes to increasing demand (and yes, this thread might be more appropriate in the economics section).

[J. J.]

The government did not create the market for the products.

The products were bombs, tanks, airplanes, and ships.. who were they selling them to?  Teenagers?

To some extent, the UK and Russia.

The governments of the UK and Russia.
I fail to see your point.

This point:

Some of that might have been the "Arsenal of Democracy" effect.  12 months before, America was selling to the increased demand.

Keynesian policies may a diminishing marginal utility effect when it comes to increasing demand (and yes, this thread might be more appropriate in the economics section).