Stocks Sink As Market Fears Mount
Investors are spooked by the prospect of even modest bederal budget cuts in an anemic recovery
Two years after the last recession ended, Wall Street is showing rising fear that the U.S. economy could be headed for a new downturn....Despite some relief that Washington could forge an eleventh-hour compromise on the debt ceiling, analysts said the prospect of even modest federal budget cuts in an anemic economy was spooking markets.
"Investors are looking past the budget situation and realizing this is an austerity plan," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "We have an economy that's struggling to stay afloat and we don't have the ammunition to keep prodding it forward."
Everybody wants tax cuts, and everybody wants a balanced budget. Well, guess what -- you can only get both by cutting spending. And cutting spending in a weak economy will plunge us back into recession. I'm not sure exactly why the "investor community" is only thinking this through now, when it's too late.
For some time now, being a progressive has basically felt like being Cassandra. Nobody listens to you until after things have all gone to hell in a handbasket and it's too late. It's a role I for one am getting tired of, but apparently we're going to have to reprise it yet again.