After the dust started to clear from the national debt ceiling limit increase I actually expected the markets to recover somewhat. After something like a straight seven days of decline, I thought the markets would bottom out and things would at least stabilize. The day after the deal was done the DOW Jones Industrials dropped another two hundred and sixty points. That was a bad sign. After the politicians held their guns and took the global economy to the edge of ruin they were able to hammer out a deal to avoid the United States defaulting on its debt. It was a pathetic deal that focused only on spending cuts that would probably do just the opposite of the stimulus that many economists believe saved the economy from being any worse. But it was a deal nonetheless.
Few people were fooled. The deal to raise the debt limit is estimated to result in the loss of an additional three hundred thousand jobs. With residential spending down, the result of employment jitters, stagnated wages, and a self-imploding housing market, and corporate America refusing to spend any of the trillions of dollars of cash being held in reserve for a rainy day despite the fact that a monsoon is raging all around us, the government is the only member of an economic trifecta with the means to do the spending to keep the economy’s head above water. While the stimulus wasn’t perfect, too many concessions resulted in nearly half the money going to tax cuts, it helped to save jobs of teachers, police, construction workers, and many others. Now, there is little doubt that the spending that saved jobs before will turn into spending cuts that will cost jobs.
So far today the DOW is down more than three hundred points, well on its way to a four hundred point drop. It might recover before the end of the trading day. Then again it might get a lot worse. Regardless of how the rest of the day goes it is a good bet that today will go down as a loss. The job creators, formerly known as the wealthy, are not just refusing to put their money back into the markets, but they are continuing to pull their money out. All that confidence that people wanted to restore to the business environment appears to be having just the opposite effect, kind of like the unintended effect on the employment market.
A lot of people tried to say that the debt deal was a compromise and nobody got everything that wanted. My liberal politicians were vocal about their disgust for the deal even though they voted for it. Some liberals refused to vote for it, no doubt taking advantage of the fact that there were enough politicians willing to go on record accepting the deal with the devil. Many described the deal as unfair and a give away to people who would like to hold the economy hostage.
However, the conservative Speaker of the House John Boehner went on record to say that he got about ninety-eight percent of what he wanted. He admits he didn’t get everything he wanted, but he got a whole lot of what he did want. Therefore, it could be reasonably assumed that the path this economy takes from this point forward is one colored primarily by conservatives. No longer can conservatives sit back and honestly say that this national financial fiasco is President Obama’s economy. The conservatives have now put their stamp of approval on this thing moves from now on.
Unlike some conservative people who hate their political opponents so much that they went on record saying that they hoped that the country would fail, it truly would be a welcome blessing to see the market take off like a rocket. It would be wonderful to see the focus on tax cuts and spending cuts that primarily benefit the people at the brighter side of our financial spectrum cast a little light on the rest of us. I’m sure that the unemployed liberal wouldn’t complain too hard if some conservative fiscal policy actually resulted in a job. I seriously doubt if somebody in such a situation would complain too bitterly or would do go on record so say how much they would like to cutoff our collective nose to spite our national face. Unfortunately, while we might not be hoping for things to get worse under this plan heavily influenced by conservative thinking, it looks like there will be hell to pay.
There will continue to be job cuts. Those cuts will result in less demand for products and services. The reduced demand will result in more job cuts and the continued reduction in products and services. It will be a continuous cycle for a while. I might be wrong and I certainly hope I am.