Who needs a Plunge Protection Team when there’s enough funny money around, apparently, to keep stocks buoyant no matter what kind of mayhem is shaking the real world? Last week was that kind of week. And Friday that kind of day, each catastrophic event overshadowing the last. Through it all, an obscenely glutted, seemingly imperturbable Wall Street barely even flinched. The day’s first big news concerned revelations that Greece may effectively have defaulted when it accepted the terms of yet one more economy-crushing bailout earlier in the week. Did they actually default? No matter. By mid-day, it was time to move on: A lethal rampage literally exploded in, of all places, Norway, superseding the troubles of Greece, along with scary sidebar stories concerning what might happen when growing jitters over the deteriorating financial condition of Spain and Italy mutate into panic, as seems all but inevitable. Cue up the clips from Norway: In downtown Oslo, an Oklahoma City-style explosion ripped apart a large office building in the heart of the downtown. Shortly thereafter, a gunman dressed as a police officer reportedly opened fire on teenage campers on the tiny Norwegian island of Utoya. Islamic terrorism? Perhaps not. Amidst reports that nearly 100 had been murdered, there was conflicting evidence about the identity of the killer, who may have been a young, ethnic Norwegian farmer. Regardless of who is responsible, it will go down as the most violent attack Norway has suffered since World War II.
By evening, however, it was the collapse of budget talks on Capitol Hill that topped the news, at least in the U.S. Details were almost as sketchy as the news coming out of Oslo, although it would appear that House Speaker Boehner walked out on Mr. Obama because our soak-the-rich President couldn’t resist piling on just a few more taxes for good measure. But stocks barely budged, and although the Dow Industrials were down 43 points, the broad averages actually closed higher on the day. We might have expected traders to show more fear toward the growing threat of a deflationary collapse in the U.S. and Europe. Then again, maybe our handicapping is wrong. Although we rate the default threat no more likely to be realized than a Martian invasion, the fiscal package that is all but certain to emerge at the eleventh hour to avert America’s technical bankruptcy will be as potent a business-killer as Obama and his left-most supporters could possibly hope for. Are we being too harsh on them? Although we stop short of believing, as some evidently do, that Obama and the radical left are trying to sabotage the U.S. economy in order to have it “rescued” by the New World Order, we wouldn’t put it past the politics of envy to try and sock it to all of the supposed fat cats who make $200k or more per year — and damn the cost to the economy. Wall Street’s truly fat cats are of course above such trivial sums and concerns, but at some point the stock market is going to have to reckon with the fact that even the half-baked compromise Congress is about to expectorate will still be the most deflationary blow to the economy since the Crash of ’29.
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RA said: “By the way, since we’re talking about making bets today, I would wager that a rather large majority of Americans, if they know anything at all about social security, believe there is a trust fund with actual funds allocated in their individual names, bulging with the cash contributions they’ve made over the years, just waiting to be annuitized at age 65. ”
It seems to me that Social Security is often portrayed in a way convenient to the argument about “big government” and the democratic “liberals” who are supposedly ruining the country. (the ruining of the country has in my opinion been a bipartisan, ‘right’/left’ effort, and in equal parts form ‘private’ sector fraud and ‘public’ sector incompetence– but I digress ). My understanding is that this is first year that the incoming funds from SS taxes will fall short of the outgoing payments. The trust fund as I undertsand was established in anticipation of this event and to protect the solvency of the program once this milestone has been reached. The problem (again, as I understand it) is that the fund has been raided and the “trust” in the ‘fund’ has been been replaced — that is, hard or at least electronic currrency representing the surplus or the savings of more than 2 trillion$$ has been replaced with Treasuries. One promise (Federal Reserve Notes) for another (Treasuries) , I suppose is one way to look at it.
So we have had a program that has a) without question, prevented millions of elderly and sick people from descending into abject penury; and b) desigend rather well in terms of ensuring its ongoing solvency. The problem then is not with a ‘liberal’, ‘democratic’ entitlement ,the problem with those who have irresponsibly permitted raiding of the reserves. Can anyone honestly say the that responsibilty falls more on liberals and democrats than the you- know- who ‘others”.?
Think unnecessary wars, the largest defense budgets in the history of the world; bank bailouts; medicaid prescription drug programs; legislation that rewards massive corporate tax evasion through accounting gimmicks, etc, etc. What if we just campaigned, for the sake of a good program, that we begin to convert the trust fund, now in the form of Treasuries (idle promises) into physical gold and silver, for he sake of ensuring its solvency? Or is that not the point? Meaning it isn the solvency of the system that is the real issue, but the fact that it is a ‘liberal enitlement” —objection to which is entirely in principle?