7/29/11…in memorium

Bloomberg Top Stories:

 

*Stocks, U.S. Futures Fall as Franc Strengthens on Delay in House Debt Vote

*Treasury May Have to Adopt a ‘Risky’ Payment Plan as U.S. Deadline Looms

*U.S. Economy Probably Grew in Second Quarter at the Slowest Pace in a Year

*Merck to Eliminate 12% of Workforce After Earnings Match Analyst Estimates

*Greek Bondholders May Shun Rescue as Potential Losses Top 21%!

*Hedge Funds Trade Autonomy for Partners to Battle Money Raising Drought!

*Tyson Foods Stuck Selling Thighs to U.S. Consumers Who Want Only Breasts   

*House Tries to Salvage Boehner Debt Ceiling Bill as Aug. 2. Deadline Nears

*Debt Plan Includes Spending Cut ‘Triggers’ With Long History of Failure

 

Yesterday’s market failure wiped out the entire gain since June 30th and one more good loss with take us back to the levels of March 31…remember the entire quarterly gain was due to that two day rally which continued into this quarter! Year to date the Dow is up just 5.7% and the S&P 500 +4.5%. The Nasdaq Composite is up just 4.3%, the 100 +6.9% and the Russell 2000 up just 2%!!! KBW Bank Stocks are off 11.5% despite earnings improvements. Why is all this happening? Because of the failure to pass the debt ceiling! TB will not bother with the overnight markets as they are all weak…thank you tea party!

 

…to a government ‘of the people, by the people, and for the people’ with the operative word here replaced by ‘corporation.’ When elected representatives to a man and woman say they are doing what their constituents elected them to do (despite evidence to the contrary from recent polls), instead of then having a responsibility to all Americans and the Constitution, can we still call ourselves a ‘great nation?’

 

We are behaving worse than a family who overspends does: buying a car and then refusing to pay for it. The same people who increased the spending our now asking you to believe them that there is a crisis. There is not! By no definition is the U.S. in crisis yet they persist in comparing us to Greece! Debt to GDP is currently at 70% but rising rapidly…there is time…most experts believe that we have about five years to clean up our act and if we don’t have the resolve to do that  then none of us deserves to exist in this great country.

 

The GOP will ultimately blame its problems on the tea party but it is in fact the leadership (or lack thereof) that is to blame. They started the rhetoric on the debt ceiling to appease the tea baggers who apparently have no idea of economic reality. They also don’t know that the answer is a quiet debate (a true one, behind closed doors rather than airing it all with rancor and venom), to reach an agreement – not to divide the two sides so they can’t even act civilly.

 

Last night, while waiting to see how the ‘vote’ went, TB listened to Larry Kudlow who had as guests Robert Reich and the defrocked chairman of the RNC Michael Steele. For the first time TB can recall Kudlow and Reich were aligned on something:  against the debt ceiling battle! Meanwhile Steele, who has zero credibility talked about Obama being the problem to the debt etc. BUT he managed to say he was glad Dubya was out of office…what does that mean?

 

Obama is being blamed for increasing the deficit yet everyone knows that the legislation passed in the wake of Bear Stearns and Lehman which averted a global collapse took effect AFTER Obama took office. That was a big part of the problem but as Simon Johnson pointed out the biggest factor was a huge drop in REVENUES caused by the economic implosion. THAT remains the problem! True entitlements and other spending are very serious but can be fixed and if we had a real government of leaders it would have been fixed.

 

The debt ceiling will fail…and TB believes Obama will not pass it even if it clears Congress because he can’t! To postpone the problem, as the rating agencies have said will lead to a downgrade and do we want to have this debate (sic) in an election year? You ain’t seen nothin’ yet!

 

Bill Clinton has urged Obama to invoke the 14th Amendment which says in part: “the validity of the public debt…shall not be questioned.” Obama declined but TB believes he will invoke this as a last resort – as politically deadly as it might be and issue an executive order raising the debt ceiling. But rather than be blamed he will have shown leadership and the blame will fall on the GOP and the tea party contingent.

 

Why aren’t we heeding TB’s pleas of SOS???

 

Have an enjoyable weekend but don’t think this issue will go away…we are stuck with it!

 

TB

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