The stock markets just closed in New York, hooray! (“Hooray,” because now the stock markets can’t fall any further today. But tune in tomorrow!) If you don’t care because you’re already poor — hello, 90% of America! — or you have retirement and/or investment accounts and have just been too terrified to look at Marketwatch.com, the Dow Jones Industrial Indexclosed down 635 points, or another 5.5% in the toilet. Wh-wh-whut’s happening? Didn’t Obama and Boehner solve the “debt crisis” or whatever made-up horse poop they invented to avoid talking about the tens of millions of unemployed workers and the stagnant/declining wages for those still hanging onto jobs and the other symptoms of our long national recovery?
So, after the S&P genius division “downgraded” America’s ability to repay its massive debts — because of the Republicans and their enabler, Barack Obama, committing national suicide for the hell of it — Osama bin Laden came back from his watery grave to kill the Navy SEALs who killed him, and then America’s official holy land (Israel) also got downgraded (to semi-holy land) and then the weekend finally ended and Institutional Investors/Hedge Fund Managers/Voldemort said, “Eh, let’s cash out and take the rest of the world down with us … although we won’t really bedown so much as slightly less crazy rich.”
Paul Krugman, now reduced to headlines such as today’s “Aaauuuggghhh!,” says the S&P downgrade didn’t actually cause today’s collapse, because if it did, then why are stocks being dumped and U.S. treasuries purchased as a safe haven?
Once again: S&P declared that US debt is no longer a safe investment; yet investors are piling into US debt, not out of it, driving the 10-year interest rate below 2.4%. This amounts to a massive market rejection of S&P’s concerns. The “signature” of debt concerns should be stock and bond prices both falling; what we actually see is those prices moving in opposite directions. And that’s normally the signature of concerns about a weak economy and deflation risk (see Japan, decline of).
What triggered economy fears? To some extent I think this is a Wile E. Coyote moment, with investors suddenly noticing just how weak the fundamentals are. Also, the mess in Europe.
Well okay, we aren’t fancy economists writing “Aaauuuggghhh!” at theNYT, but we also kind of think this is all because of the total collapse of Earth’s economy, forever. It was kind of a stupid thing, wasn’t it? The economy, we mean. Economists, whatever. The Economist. All ultimately stupid things, just like Standard & Poor’s, which not so many years ago thought mortgage-backed securities were a super-duper way to turn a basic living arrangement like a roof over your head into some sketchy investment that should be bloated and inflated and chopped up and regurgitated forever and ever. [NYT]