Posted By RichC on August 4, 2011
After the agonizing debates in order to come to a half solution to control our deficit, debt and raising the President’s ability to borrow these past several weeks, the debt ceiling agreement did little to help the world’s financial markets – Europe’s banking problem does little to help. Today Wall Street returned the largest lost since the plunge in October of 2008. The Dow closed at 11395, down for eight of the last nine days for a 4.3% loss of 512.61 points. Besides erasing the gains we seen in the first two quarter of 2011, it also pushed us 500 points under the 2010 year end close – that’s a pretty dire negative for those long in about any stock or mutual fund you can name … besides gold. In fact, I just heard that since July 25, the S&P 500 companies have lost a combined market cap of 1.3 TRILLION dollars … TRILLION with a T.
The slide down (chart above since July 22) has many worried that with the quality of leadership being demonstrated on either side of the political spectrum in Washington DC, there doesn’t look to be a chance that recovery around the corner. Previously, the experts, who read corporate balance sheets, had indicated that 3rd and 4th quarter earnings would be stronger; what happened? My best guess is that politicians demonstrated that they have little ability to address real problems in any serious way. Besides not really reducing spending and deciding to balance a budget, they haven’t done squat to encourage private sector job creation. A few steps in the right direction by the “big government solution” Obama Administration would be to back off the Washington regulate and tax more solution and instead ease (remove) many of the new regulations and tax burdens on those who invest and hire in America. I fact they might want to try the polar opposite and actually reduce the burden and get our corporate taxes more in line with growing economies of the world? (but saying this is like beating a dead horse)