Yesterday’s big sell off wasn’t due to the recent down-grading of the U.S. credit rating. Sure it played a very minor part in it, but if you look at the markets yesterday there is something very interesting the sticks out. Investors still rushed to buy treasury bonds, which drove the 10 year interest rate below 2.4% yesterday. This is a huge rejection of the S&P downgrade, but why the big fall in the DOW and world markets?
While we live in scary times in terms of the economy, we are even more so in uncertain times. No one knows what the economy is going to look like tomorrow, in 6 months or even in five years. There are no plans coming out of Washington to turn our economy around and that has investors terrified. Paul Krugman sums up the current problem very nicely:
Truly, our public discourse has been entirely about problems we don’t have, at the expense of dealing with the problems we do have.
Instead of arguing over how to deal with our problems, both parties have decided this is the time to engage in ideological war. Neither party seems to have a common goal in sight and that is the real problem and the investors are seeing it.
So how can we make this problem a hundred times worse? Well let’s ask Rep. Michael Burgess (R-TX). During a town hall yesterday, Burgess entertained an idea that is sure to not help fix our economy:
When one attendee suggested that the House push for impeachment proceedings against President Barack Obama to obstruct the president from pushing his agenda, Burgess was receptive.
“It needs to happen, and I agree with you it would tie things up,” Burgess said. “No question about that.”
Let’s put aside the obvious fault of their idea, a total lack of Constitutional grounds for impeachment, and instead lets focus on the impact this would have.
First a little recent history is in order. While President Obama was “pushing his agenda” the stock markets rallied from the big drop of the Bush recession. When Obama took office the Dow Jones was at 8077. Even with yesterday’s big drop, it still was at 10,809, or +2732 points. During that time we have seen parts of Obama’s agenda enacted and the stock markets have reacted positively.
But as I said in the beginning, the big thing driving down stocks right now is an uncertainty in our economic future. What a better way to reinforce those fears than a big uncertainty in action by Congress? Since Republicans took over the House in January we have seen 15 bills come out of Congress, including one honoring Ronald Reagan. Not a single job creation bill has been passed despite the GOP’s campaign rallies of job creation last fall. This total lack of focus on the economy and jobs is what’s heightening the fears of investors while driving down the markets.
So let’s prolong those fears. That’s exactly what Rep. Burgess and members of the Tea Party are suggesting. Let’s take an ineffective Congress and put a total gridlock on them by keeping them tied up with bogus impeachment proceedings. That will send a really strong signal to investors that Washington doesn’t give a crap about the economy and only wants to further the partisan divide that is already tearing America apart. Let that happen and watch the DOW quickly drop back into the 8,000 point range if not even lower.
When reading these stories and hearing the Tea Party do things like cheer the credit rating downgrade of the U.S., I can’t help but think about Osama bin Laden. This was a man who said his primary goal was to destroy the economy of the U.S. For that we referred to him as a terrorist, yet the Tea Party seems to have the same goal insight and they expect us to call them patriots? I’m sorry but when I see what the real goal of the Tea Party is, I know Joe Biden was right when he referred to them as terrorists. Now if only the media will view them the same way and stop giving them any attention, especially when the American people are quickly turning on them.