The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Dow Drops 266 Points, Both Sides Race to Claim Defeat in Debt-Deal Compromise

Posted on | August 2, 2011 | 14 Comments

Who didn’t see this coming? For months we were warned that financial catastrophe would ensue unless Congress raised the debt ceiling. So Congress raised the debt ceiling and . . . financial catastrophe:

Stocks plunge as economic concerns grow

Associated Press
NEW YORK — A sell-off is erasing all of the year’s gains in the stock market, which has hit its longest losing streak in two years.
All three major stock indexes fell today as investors reacted to more signs of weakness in the U.S. economy and poor earnings from several big companies.
The S&P 500 fell 33 points to close at 1,254. The Dow lost 266 to end the day at 11,867. The Nasdaq composite fell 75 to close at 2,669. . . .

Meanwhile, in an event unprecedented in the history of spin wars, conservatives and liberals rushed to claim that the other side won.

Emily Miller of The Washington Times proclaims that the GOP caved and gave Obama everything he wanted, but Dave Weigel at Slate calls it “a generational defeat for liberals”:

It ended with scenes straight from a Nora Ephron movie, or one of those weaker West Wing episodes with Kristin Chenoweth as the way-too-competent consultant. Gabrielle Giffords returned to the House to cast her first vote since surviving a bullet to the brain. The House and Senate passed a debt-limit deal that got the votes of Nancy Pelosi and John Boehner, Harry Reid and Mitch McConnell. The crisis concluded with a Rose Garden speech, as if someone had just won a war.
All of that obscured the truth about the debt crisis. The truth: It was completely insane. It was, as Democrats say, largely unprecedented and mostly unnecessary. It was, as Republicans say, fogged up with hype that made the politics and market moves uglier than they needed to be. The inevitable tick-tocks of the deal and the slide shows of winners and losers obscure the fact that Washington just blew two months negotiating a 10-year budget cut right before it was about to knuckle down and … negotiate the 2012 budget. . . .
In the Bush era, Republicans once deemed the debt-limit hike as “passed” in another funding bill. In February 2009, Democrats simply added an $800 billion hike in the debt limit—from $11.3 trillion to $12.1 trillion—to the stimulus bill. There was a consensus: Play with the debt limit and you lose. That was true until July 2011, when Republicans played with the debt limit and won. . . .

So here we have a liberal (and really, Dave, any illusion that you’re not a liberal has long since ended) declaring forthrightly that the GOP won, whereas not a single conservative friend of mine agrees.

It has been said that victory has many fathers, while defeat is an orphan, but this bill looks like an unwanted legislative bastard.

Ace of Spades has relevant thoughts, including a dig at Weigel.


14 Responses to “Dow Drops 266 Points, Both Sides Race to Claim Defeat in Debt-Deal Compromise”

  1. AngelaTC
    August 2nd, 2011 @ 9:09 pm

    Oh, think how bad this would have been if Congress hadn’t saved us.  

  2. Peter Ingemi
    August 2nd, 2011 @ 9:10 pm

    Ok one conservative friend agrees.

    We won a huge political battle and a small financial battle

  3. Wilbur Post
    August 2nd, 2011 @ 9:14 pm

    Now that the smoke from the debt ceiling war has cleared, the markets can now see the bullet train wreck which is the recovery that wasn’t.  Did anyone notice the anemic growth in 1Q and 2Q?  They have now.

  4. Ladd Ehlinger Jr.
    August 2nd, 2011 @ 9:36 pm

    Note the stock market dip and the gold bump. The market knows we have to print money and devalue the dollar.

  5. JP Morgan: Recession 2012 « Don Surber
    August 2nd, 2011 @ 6:01 pm

    […] Although it did cause Robert Stacy McCain to observe: “Dow Drops 266 Points, Both Sides Race to Claim Defeat in Debt-Deal Compromise.” […]

  6. Joe
    August 2nd, 2011 @ 10:03 pm

    Stacy’s betting on the market is like his betting on roulette.  Close, but no cigar! 

  7. Joe
    August 2nd, 2011 @ 10:03 pm

    At least I am in oil. 

  8. DaveO
    August 2nd, 2011 @ 10:13 pm

    This was just a carnival sideshow. The main event will be the DOJ slapping down the states’ redistricting plans until after the 2012 election.

  9. Quartermaster
    August 3rd, 2011 @ 12:33 am

    The libs are screaming here in Western NC. The redistricting plan pulls Asheville into another district that will dilute the crazies that live around it, and puts the more conservative mountain counties into NC-11. If it stays, then Shuler, a so called blue dog, but actually a lib, is probably toast. Couldn’t happen to a nicer guy.

    I find I agree with someone quoted on World Net Daily that “this deal would have to get better to be a disaster.” The Dems are squealing, but this is much like Brer Rabbit’s “please don’t throw me in that briar patch.” Conservative got less than nothing when they caved, and the Dems have business as usual. Anyone thinking any serious cuts will come out of the “Super Congress” is deluded.

    One thing that must be understood from history, the Republican have *always* been a leftist party, they, in fact, were the first. The Whigs, from whom they descended, were quite centrist by comparison. It was not until Wilson came along that the Dems turned hard left. There has been no conservative party since.

  10. JeffS
    August 3rd, 2011 @ 12:34 am

    Maybe Da Tech Guy does owe you $10, Stacy.

  11. Anonymous
    August 3rd, 2011 @ 1:05 am

    The market drop is what ‘compromise at any price’ will bring us.  Slow roll to Hell with nothing to eat but sugar coated Satan sandwiches.  Mark it.

    d(^_^)b”Because the Only Good Progressive is a Failed Progressive”

  12. Charles
    August 3rd, 2011 @ 2:25 am

    Both the Democrats and the Republicans were defeated by this compromise; the Tea Party, whose true believers did not vote for the deal, is undefeated.

  13. Adjoran
    August 3rd, 2011 @ 7:11 am

    The equity markets’ dip has very little to do with the debt ceiling deal.  It’s the reality of disappointing earnings, guidance for the foreseeable future being revised downward, manufacturing outlooks falling, lagging employment, sagging consumer confidence, and only very slightly the potential of a rating downgrade anyway which are tanking those markets.

    How do I know this?  Well, if the problem was really the debt agreement or the potential for downgrades, the bond market would be showing it.  But yields are falling, not rising, for most US Treasury paper and the derivatives based upon them.  This forecasts stability and no increase in interest rates, meaning the bond market doubts a downgrade will occur.

    Remember the bond markets are more than four times the total of the equities markets’ capitalization.  That’s where money goes to be secure.