Dow Down 512, 6% Since Tuesday; 10th Biggest One Day Drop On Record

Remember, this is all because Boehner didn't return Obama's phone call promptly.

Nothing to do with the fundamentals.

Or Europe.

"We're not steering this bus—it's all coming from Europe," Art Cashin, director of floor operations at UBS Financial Services told CNBC. "We’re hearing reports of funds drawing out of European banks and we’re pretty close to something that might turn ugly."

"It may translate into a strain on the financials system and earnings on the multinationals, which have been carrying the load for Wall Street," Cashin added.

European shares hit a two-year low. The Bank of England and European Central Bank both left rates unchanged, but it did little to improve investor confidence. The ECB signaled it was buying government bonds in response to a deepening European debt crisis.

Investors were also spooked after ECB President Jean-Claude Trichet said "downside risks may have intensified."

But America is the engine of Western growth, and I have to think if America were experiencing a recovery, Europe would be doing better, too.

In fact Europe had been growing some -- growing more than Obama's America -- but it looks like we're all going down together.

Allah calls his post "total fear," after an analyst's appraisal of the mood on Wall Street. And it's not fear about the debt deal and America's longer-term financial health, but more than likely of the short-term fear about a double dip.

In fact, the debt deal came to fruition at exactly the same time as a series of devastating economic reports that indicate we will be lucky if the current moment is only a “slowdown” and not the beginning of—maybe even the middle of—a double-dip recession. You don’t need an economics degree to see the disaster in these numbers. Lower consumer confidence means less consumer spending, which means less demand, which means less economic activity, which means no improvement in employment figures and very possibly a worsening of unemployment. What we are seeing on Wall Street this week is that a coming recession is being “priced in.”

I think the public has long known that Obama's recovery was not a recovery. It seems like Wall Street is finally realizing this.

Allah points out something that's been bothering me.

If you assume (as I do, and as you probably do too) that a great deal of hoarding/risk aversion is going on, because no one knows what the tax/spending environment will actually turn out to be, then delaying the final work-out of our debt deal until Thanksgiving or Christmas continues freezing the wealth-creation forces in paralysis until then.

That's a very bad idea.

I earlier wrote that Obama knows some adjustment to entitlements will have to happen -- after all, he campaigned on just that idea. But, for political benefit, he refuses to acknowledge this now; he wants to delay until he's re-elected.

It's not just important political decisions that have been put off, at Obama's insistence, until 2013. It is crucial economic decisions -- and wealth and job creation that flow from those decisions -- that have been delayed for a year and a half, until Obama decides it's safe to consider the national interest again.

posted by Ace at 04:47 PM

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