Article “Dow Jones Industrial Average Closes Down More Than 630 Points” reports:
“On the first day of trading after Standard and Poor’s downgraded U.S. credit to AA+ from the top-level ranking of AAA, the Dow Jones Industrial Average closed down more than 630 points, or 5.5 percent, according to Google Finance. That is the sixth-worst total point drop in the history of the Dow Jones.”
WATCHDOG: We don’t believe the cause of the drop is either the amount of U. S. debt or the downgrading of U. S. treasury notes. If the nation was recovering from the recession by adding jobs in an amount typical of recoveries from past recessions, there would be no down grade and, even if there were one, there would be no huge sell off.
It is all about insufficient consumer demand and jobs. To borrow from banker’s parlance, we have a deficit which is a “performing, nonperforming loan”. We can pay the interest and principle now from other sources (largely borrowing) but there is no sign of the economy actually recovering so that the budget can be balanced and the deficit reduced.
Meanwhile the government is paralyzed between the vast majority of economists who prescribe stimulus and the conservatives that want huge slashes in government expenditures resulting in immense job losses and massive suffering. We see little prospect of recovering taking place for many years to come, perhaps a decade. By then China will have gobbled up the lions share of the commodities and be the economic ruler of the world.
Some world we are leaving our children!
