We get our debt ceiling deal, only to look at the S & P 500 fall 3.7%, finally, to Close Thursday. What gives?
Let me start by suggesting that the debt-to-chat with the three issues lumped which I consider to be separate issues. First, the challenge of healing was the u.s. Government for payment of the invoices was going to the end of August. The second is the near-term must be imported with the unemployment down-we see more robust economic growth, the depreciation of the Americans to act as quickly as possible. And thirdly, the challenge for Us is daunting, fiscal policy sustainability over the long term-debt--of course, can not continue, as several of the GDP will grow and something need to be amended to ensure that it is not.
The first problem is the Government so as to find the-immediate expenditure commitments--was completely own the Congress or the monster. Congress had set out on the expenditure to a certain level. Congress had already approved the tax led to a revenue significantly, or lower than the spending levels. It is then clear that the Government needed to borrow additional funds. The Congress was still pointed out that, as well as how much to form the permanent border could be borrowed. There was some doubt about how all this had to be reconciled, and how exactly to items, such as social security payments, military salaries and debt totals were all going to creditors a pay this week. The answer was, of course, would be a "clean" to raise the debt ceiling and standalone instruments separately Edit the policies of tax expenditure or, if legislators wanted to keep people from seeing the growing total lent amount.
So perhaps we should be thankful that at least one thing we got out of last-minute agreement was reached for the lifting, which in August, the debt of the federal payments is to be carried out in the schedule. But I think that there was some drama, do, as far as we did in the accident. People were getting nervous about how this all would. When people are nervous they sit-sit on the industry and when the economy side seriously can box. Concerns about how all this could end up contributing to consumer sentiment in July by drop-down one of the factors and overall loss of trust could be the recent weakness in spending are also consumers. I found myself getting phone calls from friends, is what Washington wrangling can mean--was concerned about the still safe to be present on the holding of T-bills, and if not, where should people use money? A few years ago, hardly anyone was talking about the us seriously to honor can fail to safeguard the possibility of the debt. Today is open to debate or downgrading of U.S. debt. Even if we got through this period, the residual dumping margin is going further uneasiness exists and may leave us with less room for manoeuvre when the real problem in the whole of the public trust. disorder of
Another problem-getting the unemployed back to work-of-country--is one that can only aggravate the recently to consider the measures. Many of the hero of the Group's strong Jaan, the fact that in the long term sustainability of public finances. But I think as a passionately, that in the near-term spending cut is overcapacity. Reduce public expenditure has to be somebody's income, namely, that a government employee, contractor or the consignee or by transfer fees. Granted, we will soon have just start making these cuts. But the time to do so is, in the private sector will pick up the slack available jobs. If we try to budget in 2012, the Tan, it will add more people to the current unemployment rolls just. swollen Again, perhaps the second case, be thankful, the budget agreement is that it takes in 2012, the air force seems to be quite low.
And how is a long-term goal--to fiscal policy, responsible for the calculation of the rate for the next decade? Legislation sets a target to cut the deficit, the cumulative, 1.5 trillion $ in the next decade, a complex series of triggers, and contingencies, which is intended to ensure this happens. What bothers me about this was not a real debate or what exactly we are going to make the agreement or how not to do it to me, and that the reason for the absence in the real debate is fairly simple. Voters want to believe they can get something for nothing and politicians are only too willing to promise just so.
Responsibly in dealing with the challenges of the long term, so that the change will not run short of economic instability, strikes me as rather straightforward problem. The achievement of the objectives of these measures, such as the raising of the age of eligibility for Medicare and social security and Medicare by adding co-pay over time according to the schedule specified. Maybe will be ideally surprised and all this will finally put the legislation today will Play on the procedures of the order.
I know, no one else had not been satisfied with either of the parties, and all of it could be argued that the agreement in its own way, all three objectives, I am at least with the above, the Articulated muddle through. So if the contract is almost reasonable, how to sort the incoming news about the stock market tanked?
One response is that there has been an unwelcome news and arrive at the same time. I would like to present yesterday at the top of the list of the ISM manufacturing report. This is the diffusion index, which more than 50-value means that the spaces are reporting improvements than are reporting declines. July the value of the index (50.9) means that manufacturing is still expanding. If the economy were actually growing problem is we are looking forward to see the number at more than 50 historical average, this index is 34.0. And the last years, this measure had been an average of 57.7. The production was the one bright point in the economy. --Was the past tense.
And now we have a so-so the car sales figures for July. Light vehicles are sold in seasonal work of unadjusted ever so slightly in the June 2011 or July 2010, but in each case, the growth of less than 1%. One encouraging any detail is in the home country, sales of cars manufactured showed decent profits, low numbers of Japanese imports, press and hold the totals. Wall Street Journal offered this analysis:
Japanese automakers have been hurt by dwindling dealer inventories, 11. March of the earthquake, which interfere with the auto-parts production in Japan and North America, the impact of the development.
Despite the downturn in the leaders expressed their confidence that industry sales will improve. They said, Toyota and Honda vehicle arrives in dealer lots, in the autumn, to give the discount of the prices of those companies more heavily.
In order to ensure that things can be improved. But it is certainly in the first half was rather dreadful in the whole of the economy and triggered the rebound of the promised in July.
That is enough to deflate enthusiasm you might have felt regardless of that, the Federal Government has figured out the payments scheduled for the celebration of the coming months as news.
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