Skeptics believed the collapse of the deficit reduction super committee had been “baked in” to Wall Street prices. The cynics predicted there would not be much market reaction if the group failed to come up with a ten year deficit reduction plan.
This may have been wishful thinking.
Word of the super committee’s demise has sent the Dow down 300 points — and falling.
President Obama, who was on an international holiday – oops, on an overseas mission – remained completely aloof to the super committee negotiations. He desperately wants to chastise Congress after its failure.
This may be a crucial White House political miscalculation. When things go bad most people seem to punish those who are at the top. In this case, the guy at the top is you know who…
The next chapter to play out is a probable downgrade of U.S. credit by credit rating agencies.
This was a loser from the start. When Congress found that they had painted themsevles into a corner during the debt-ceiling brouhaha they used the “Supercommittee” as an out card. It did what all political maneuvers of this type are intended to do – It kicked the problem down the road for a few more months and left everyone able to say “Hey – It wasn’t MY fault.”
Besides any “bi-partisan” budget-reduction group that includes Senators Patty Murray and John Kerry is definitely not going to be about spending cuts. We can now sit back in the grim certainty that the “automatic” cuts will never materialize.
300 points is only ca 2.5%. Just a sneeze, I would say. Wait for the cold.
“The next chapter to play out is a probable downgrade of U.S. credit by credit rating agencies.”
An analysis I heard this morning suggested that downgrades were not likely this time because there are already massive, real cuts that go into effect automatically thus helping shore things up fiscally. Now, if Congress gets it together in time to undo those cuts BEFORE they go into effect that’s another matter…
– pundit called it a correction. Oh:I:see. Market goes up a little to take a step in the direction of making up the lossses over the past three years, but then has to drop again two steps as a correction to such gains.