Whoooooooooops

Stock market tumbles again despite avoidance of U.S. default:

The Dow Jones industrial average slumped more than 265 points Tuesday as mounting concerns about the fragility of the U.S. economy weighed heavily on Wall Street. It was the Dow's eighth straight daily loss, its worst string since the depths of the global financial crisis in 2008.

Though relieved at Washington's ability to forge an eleventh-hour debt-ceiling plan that averted a feared default, investors are spooked by the notion that the government cutbacks called for in the debt plan could further weaken an already torpid economy.

"Investors are looking past the budget situation and realizing this is an austerity plan," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. "We have an economy that's struggling to stay afloat and we don't have the ammunition to keep prodding it forward."

Emphasis mine.

Open Thread: House Vote on the Raw Deal

Have at it.

Recommended Reading

This statement by Economic Policy Institute President Lawrence Mishel on the proposed agreement to raise the debt ceiling is really great in succinctly explaining why it's so failful. I'm not even going to try to blockquote it, because it really just needs to be read in its entirety.

David Frum (I never imagined I'd link a piece by Frum under the heading of Recommended Reading, lulz): Wake up GOP: Smashing system doesn't fix it.

I'm a Republican. Always have been. I believe in free markets, low taxes, reasonable regulation and limited government. But as I look back at the weeks of rancor leading up to Sunday night's last-minute budget deal, I see some things I don't believe in: Forcing the United States to the verge of default. Shrugging off the needs and concerns of millions of unemployed. Protecting every single loophole, giveaway and boondoggle in the tax code as a matter of fundamental conservative principle. Massive government budget cuts in the midst of the worst recession since World War II.

...Republicans have become so gripped by pessimism and panic that they feel they have nothing to lose by rushing into a catastrophe now. But there is a lot to lose, and in these past weeks America nearly lost it.

Krugman answers the question, inevitably intended to be a belligerent conversation-stopper, about what he would have done in the president's position:

I would have made a statement declaring that giving in to this kind of blackmail would constitute a violation of my oath of office, and that my lawyers, on careful reflection, have determined that there are several legal options that allow me to ignore this extortionate demand.

Now, the Obama people say that this wasn't actually an option. Well, I hate to say this, but I don't believe them.

...Why, at this point, should anyone trust these people when they say that they did all they could?

It's much, much too late for Obama and co. to say "Trust us, we know what we're doing." My reservoir of trust is now completely drained. And I know I'm not alone.

Indeed not.

An Observation

I feel like I have spent an enormous amount of energy paying attention to debt ceiling and spending negotiations the resolution of which will make me even more tired.

I may need to sleep for 100 years to recover.

And the stupid thing is, I already know the outcome: Austerity and garbage.

Recommended Reading

On the economy...

Paul Krugman: The Lesser Depression.

Right now we're looking at not one but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets.

We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here's the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

...The disappearance of unemployment from elite policy discourse and its replacement by deficit panic has been truly remarkable. It's not a response to public opinion. In a recent CBS News/New York Times poll, 53 percent of the public named the economy and jobs as the most important problem we face, while only 7 percent named the deficit. Nor is it a response to market pressure. Interest rates on U.S. debt remain near historic lows.

Yet the conversations in Washington and Brussels are all about spending cuts (and maybe tax increases, I mean revisions).

And Sarah Jaffe: The Unemployed Aren't Invisible: Washington and the Media Just Aren't Paying Attention.

The New York Times said the unemployed have become invisible. Maybe in Washington, in political circles where the question is not what to spend to put people back to work but which programs to cut. But there are 14.1 million unemployed right now, scattered around the country, many of whom have been out of work for months or years.

..."People are the most precious resource that this country has; the determination that people have makes this country what it is. But they continue to step on the backs of people who have given their all, not just for one generation but for generation after generation, you work and pay taxes and try to live in a decent home, and then they say, we can't help you," Benita Johnson of Pittsburgh, Pennsylvania told me. She's been out of work since May 2010, and has only been able to find temporary positions since 2006—after taking a serious pay cut to get a job that would allow her to get her bachelor's degree at night.

Both pieces, in their entirety, are worth your time.

It is truly like the people running this country have no fucking clue what's going on. All they're talking about is deficits and cutting spending, when what they need to be talking about is jobs and increasing spending. It's jaw-dropping. I've never seen a government (executive and legislature) so wildly out of touch with the needs of its people—and I've lived through Reagan and GW Bush.

The sorts of economic turmoil in individual people's lives, from very visible high rates of foreclosure to the less obvious (or less discussed, anyway) widespread lack of employment among young graduates carrying debt, is of the sort from which people can live a whole lifetime and never recover. This is grim stuff. And our elected officials are busily bickering over how austere their austerity plan should be. HOLY SHIT.

"Deficits are a Grrrl’s Best Friend"

This is a very good primer on deficit spending vs. austerity and the "fictional symmetry between private sector (household and corporate) bookkeeping and the U.S. federal debt," care of professor of economics and of women and gender studies at the University of Southern Maine Susan F. Feiner.

So the President Gave a Speech Last Night

The full text is here. He pretty much reiterated what was reported Tuesday: He will order the withdrawal of 10,000 troops from Afghanistan by the end of this year, and 20,000 more by next summer, leaving 70,000 there, who will be gradually withdrawn until security is handed over to Afghan authorities in 2014.

One of the most interesting parts of the speech was this:

Over the last decade, we have spent a trillion dollars on war, at a time of rising debt and hard economic times. Now, we must invest in America's greatest resource – our people. We must unleash innovation that creates new jobs and industry, while living within our means. We must rebuild our infrastructure and find new and clean sources of energy. And most of all, after a decade of passionate debate, we must recapture the common purpose that we shared at the beginning of this time of war. For our nation draws strength from our differences, and when our union is strong no hill is too steep and no horizon is beyond our reach.

America, it is time to focus on nation building here at home.

Leaving aside his usual pixie dust-farting unicorn pipedream of a unified nation with a common purpose, I'll just note that promising to end wars abroad to reinvest in the US is a brilliant idea, and "time to focus on nation building here at home" is a great line, except for the fact that it's BULLSHIT as long as "there is no appetite" for progressive economic policy in the White House, and the Democratic Senate Majority Leader brags about "historic" budget cuts made as part of a doomed austerity strategy which will fail to stimulate growth while simultaneously creating a greater strain on underfunded social programs.

The president talked a good game, as usual, but the reality is that he and his party's Senate leadership are busily endorsing Social Darwinism as their grand vision for America's future.

We have, unfortunately, absolutely no reason to believe that the funds currently being spent on the war machine will be used for anything but paying down debt.

Maybe hope Obama can create a nice little surplus for the next Republican president to squander. Jeb Bush should be ready to ruin the country by 2016 to complete this carousel of horrors.