The stimulus money comes from raising the federal budget deficit to uncharted territory.
The third quarter from July to September was the focal point in reversing the trend of negative growth in the economy. The third quarter allegedly saw the economy grow at a rate of 3.5%.
So now what happens. Investors are fretting that the stimulus money is drying up too soon and that the economy will not take off on its own. The government's managers (mostly former Wall Street executives) are saying that the economy will grow but at a smaller rate then 3.5%.
Investors are ready to throw in the sponge and sell off their equities.
Shall we state the obvious. Pressure is being applied to maintain the stimulus money flow, deficits be damned. Wall Street loves the umbilical cord connection with money flowing directly into their bellies from the government well also known as taxpayer money.
What's a Treasury Secretary to do. The short story will be to continue the flow of stimulus money but maybe with a tiny twist of the knob to slow it down. The deficit will grow larger and if we are lucky, the DOW holds at 9,500 to 10,000. Just print up an extra trillion and devalue the dollar.
Your portfolio may stay at its present level (or less) but the overall value of your money is dropping.
Reuters: Goodbye to all that stimulus?
...key report on employment next week.
That, and any hint the Fed may start to pull back some of the liquidity it has been providing to markets through its debt purchases, could hurt stocks.
"If you got language along those lines that suggested that they could be raising maybe a little bit earlier than what folks were expecting, then yes, I would expect the market to sell off on that news..."
5 comments:
Trillions to a few , while millions have nothing to pay their ever increasing bills for energy, health care, food, state and local taxes and the list goes on and on. Those that have BIG Gov't jobs are fine no problem just raise everyone's taxes because we can. Those with BIG Wall st. connected jobs fine just jack up prices on everything we make what are u the consumer going to do about it? Look at OIL going up even though demand goes down and supply is going up as well. Wondering WTF happened to the law of and supply and demand a hoary mainstay of so called free markets are U? Forget about that idea it's a fairy tale told by all the right wing think tanks and Fox news. The truth the market is a rigged game and those who know nothing about how it really works should stay away from it or else!
The environment is changing for the worse and the new breed of financial investment entrepreneurs are out for blood in a way that is unparalleled.
There is no connection to society or humanism or any of that stuff. Its very cutthroat. Job losses, unemployment all of that is meaningless.
People on Wall st. are no longer give a shit about America and especially hate the American worker. They prefer a Communist State like China or an Authoritarian one like Singapore where there are no pesky labor unions or regulators or human rights groups. In these kinds of countries they simply take care of the elites that run these States and they're businesses are guaranteed security and endless profits. If America ends up with 50% unemployment all the better since by 2010 this Depression will be Obamas and MSM will have completely forgotten about what's his name? The Dems. aren't helping themselves either by catering to the same elites that have caused this mess on the mistaken gamble that they will help them turn things around. Not going to happen this time. Obama isn't going to have Clinton's good fortune. The American job machine is now broken for the long term. The massive structural problems plaguing our faltering shrinking private economy have finally caught up with us. Pumping trillions into it is just like pumping a junky full of drugs. Oh, he'll stay high for a while but it's hell to pay when he comes down. My guess is Obama will just ask for more drugs ( $$) and that $$ will get sucked up by the same cast of characters as before only twice as fast. To be blunt were FUCKED!
Interesting that you mention Singapore which is number 2 in the world in terms of disparity of income. The USA is number 3, Hong Kong is number 1.
Obama will ask for more money. He is hoping that there will be a green revolution, a change in energy and energy use. This is his hope for the new economy and this is how he justifies his action. In simple conceptual terms its realistic because the oil based endless growth economy has maxed out as we know. The problem is also as we know, realistically the corporate elite won't let it happen until every last drop of oil is burned up in some bugger's car.
The biggest problem in my opinion is the vast lack of nuanced information and understanding of the American people. Fox will convince millions that a neocon conservative can revive our old way of doing business. Also as we know, that can't happen, but it can happen for a few thousand people perhaps.
I think this is the battle. There will be more ripping apart of lifestyle, more deception and stupidity from leaders and the public, more attempts at quick fixes, lots of casualties, and a few bright spots. What we are talking about here is where is this junk truck heading.
Obama's message of Change is turning out to be nothing more then a campaign slogan @ best and a terrible deception @ worst. So far the Change and been a few nickles and dimes for the masses while trillions gush upwards to the elites. A few millions life styles are being maintained royally while the rest of the country sinks deeper into this mess.
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