I wish I could say that the E-trade Baby there was not going to be doing that all day tomorrow, but it does not look good.
If you need a crystal ball for what is going to happen on the world stock markets tomorrow the good news is that the Australian and Japanese markets are already open.

The bad news is that as of the time of this post both the Nekkei and All Ordinaries are down more than 1% in early trading. Given that last week the major US indexes lost five, seven and eight percent of their value, it is probably going to be a really dark day on Wall St.

Standard and Poor’s waited until well after the market closed on Friday, which is probably why the Dow was able to post a modest gain for the end of the week. Even after having two whole days to process the downgrade of U.S. Treasury debt and the report that accompanied it, there is not a lot of upside for traders to look at.

Jane and David Dayen have had this pretty well covered in terms of the possible politics. I highly encourage you to read what they have written and continue to right. But the thing that I am looking at is the affects of this downgrade rather than the politics.

If this political maneuvering by S&P actually causes a 1000 point drop in the next couple of days it will almost certainly head us back into a technical recession. I say technical because while we may have met the economist’s standard for being out of recession the practical affects in terms of wages and employment have not gone away.

Sure the economy grew, but not really so you would notice if you were not a commodities trader or a Wall St banker. What this means is that local governments from States to cities to rural townships have all cut their spending back, often in ways that drastically affect the services that they can offer.

Colorado Springs was one of the first to go truly radical with it, stopping garbage pickup in parks, turning out street lights and even ending health inspections of Day Care Centers and public pools. They did it out of ideology, since they had the option of and rejected a modest tax increase that would have covered all of that.

If we go into a serious recession again, there isn’t a whole lot left to cut that does not start to impact the citizens as they have been impacted in Colorado Springs, only this would be nation wide. It is ironic that we will get a taste of something near and dear to the dumbass hearts of the Republicans, what a post balance budget amendment America would look like.

You see the Republicans have been mostly successful in forcing such requirements on states and cities. If it feels like it might not be that bad, you have to remember that the Federal government send ton of the taxes it collects back to the States. Those governments use that money to balance their budgets, mostly because they don’t come anywhere close to collecting enough revenue from their own taxes to actually cover the cost of the services the citizens require and demand.

That cupboard of money is gone. The moronic focus on debt reduction and austerity (though none in Washington dare speak its name) means that unlike last time, when there was some (too little by nearly half) money in the form of stimulus from the Federal government, it is not going to be there this time.

There are a lot of angry people. They are pretty damned fed up. If (and lets hope I am 100% wrong on this) the stock markets lead us into another recession, I think that patience is going to not just wear thin but wear out.

But that is for another day. What we can do now is only watch, wait and see if the combination of a passive President who would rather make deals with hostage takers, a Democratic Party that would rather follow him off a cliff than lead and Republican Party that has been taken over by the bat-crap insane had actually driven the Clown Car of State off of a cliff.

What’s your take on what is going to happen tomorrow, Firedogs? The floor is yours.

Bill Egnor

Bill Egnor

I am a life long Democrat from a political family. Work wise I am a Six Sigma Black Belt (process improvement project manager) and Freelance reporter for Govtrak.org

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