Since the current stock market issues likely to be blamed on the Republicans and Tea Party budget battle of the past few weeks, let's take a closer look to see whether that's true or not. Here's what one conservative, right-wing propaganda rag has to say
Here's what has stock investors spooked:
Tuesday's budget deal between Congress and the White House was hailed in Washington as a resolution of the months-long battle that brought the government to the brink of insolvency. But the agreement did little to lift the clouds of uncertainty over exactly what government spending will be cut.
If the plan is fully enacted, the deficits would shrink by less than $3 trillion over the next 10 years. That's less than the $4 trillion that bond rater Standard and Poor's said was needed to renew the government's AAA bond rating. It also fell short of what some investors were looking for.
"You saw that we didn't tackle the entitlement programs: no Medicare, Medicaid; no Social Security,
" said Steve Grasso, head of institutional sales at Stuart Frankel. "I don't think the markets like what they got out of it.
That's why you see gold rising and equities falling."
After a convincing pick-up in growth last year, the U.S. economy appears to have stalled out. It may be headed back into recession. On Friday, the government slashed its originally tally of gross domestic product, and said the economy advanced at an annual rate of just 0.4 percent in the spring quarter. The revisions also showed the recession was deeper than originally reported.
A string of fresh economic data point to continued slowing in the third quarter. On Friday, investors will find out how badly the debt statement hurt the job market in July. Job growth slowed sharply in May and June.
If you don't have the employment picture improved, then, in fact, we don't have a real recovery here.
Current estimates see job growth of about 85,000 for the month, not enough to keep up with the expansion of the work force, much less put a dent in the 9.2 percent unemployment rate.
The political chaos on Capitol Hill briefly diverted investors' focus from the ongoing debt crisis in Europe. On Wednesday, rising interest rates on Spanish and Italian bonds commanded their attention again.
"Tensions in bond markets reflect a growing concern among investors about the systemic capacity of the Euro area to respond to the evolving crisis," Barroso said in a statement.
Though most European banks recently passed a financial "stress test," there's skepticism that they are prepared to cope with widespread government bond defaults. Even if they're able to withstand the losses, those defaults would be a heavy blow to Europe's economy.
"It seems increasingly likely that Italy and/or Spain may eventually restructure their debts, with disastrous consequences for the euro-zone economy," Capital Economics economist Ben May said Wednesday.
There are signs that the global economy is also slowing, which would reduce demand for American products.
A weak job market and stagnant wages have also forced American households to cut back, further weakening demand for products and services. Separate surveys have shown fading consumer
confidence in the economic outlook.
The belt-tightening is part of an ongoing retrenchment of the borrowing binge of the last decade.
Consumer spending, which accounts for about 70 percent of U.S. economic activity, dropped 0.2 percent in June, the first decline since September 2009. "That's a pretty weak sign," said Roger Altman, an investment banker and former Treasury official. "It fell because the debt-to-income ratio at the household level has only repaired about 50 percent of the distance it needs to go to get to historically normal levels. It's quite elevated."
It seems that debt is a big theme in all of this. Euro-debt. Consumer debt. Even U.S. government debt. And behold, that's the thing that wasn't even close to being addressed by this budget deal...and it was the thing the Tea Party was trying to hold the line on...something to address the massive and growing government debt.
So it appears that only a simpleton would suggest that what's happening today is the result of the Tea Party exclusively (or, actually, even in part
given the investor concerns over an extremely limited deficit reduction plan.)