Rather than sit down with the president and the Senate and negotiate a deal that everyone can agree on, they have WASTED three days of our nation's time hammering out a bill that their own caucus can't pass. This is, at this point, gross political incompetence and I think that we, the people, should initiate a class-action lawsuit against the Republican Congress for damages caused by their gross mishandling of our nation's debt, which is going to end up causing the first-ever downgrade of U.S. debt and will end up costing our nation hundreds of billions of dollars - dollars that, in case you have lost track - WE DON'T HAVE!
Don't worry, congresspeople can afford to get sued. Ben Quayle (son of Dan The Great) was speaking on behalf of the Republicans this morning and, of course, why shouldn't he as he's 34 years old and has been in Congress for six months now so who better to go on TV and spout out a slew of lies than the man who ran on a campaign last year that called Obama "The Worst President Ever" and promised to "Knock the Hell out of Washington" which, of course, whipped the immigrant-hating white folks in Arizona into a frenzy and they sent him to Washington to wreck the place. Well Mission Accomplished, as we sit now just 72 hours from the point at which the United States defaults on its debt.
And who sponsors Ben Quayle? Why the financial sector, of course, those who will, once again, benefit the most from fear and panic in the markets as another few trillion dollars of middle class wealth is transferred up to the top 1%. Ben collected a whopping $709,660 from the finance sector last year with $97,000 just from Cerberus! As I said before – what makes you think that the Reps don’t want a default? Look who’s pulling their chains ...
I think they should make politicians wear the patches of all their sponsors on their jackets - like race-car drivers, that way we'd know who we are really talking to. Of course it could be dangerous for the sponsors - Lehman Brothers sponsored Barack Obama and look what the happened to them!
8:30 Update: Well that's enough political nonsense. We're screwed and there's nothing we can do about it except vote for another round of sell-out hacks in November so they can get rich selling our country down the river to corporate interests. Let's take a look now at our economy and - OH NO! Holy Mother of GOD - The GDP is TERRIBLE! Sorry, that was my first reaction. Now that I've had a moment to reflect on our 1.3% revised GDP (down 31.5% from last Q) and our GDP Price Index that's UP 3.2% (50% more than predicted by leading economorons) I can state more definitively - Holy Mother of GOD - The GDP is TERRIBLE!
OK, that's enough sugar-coating - let's take a closer look at this report. Well, on the bright side, they've revised Q1 down to 0.4% (from 1.9% so they misrepresented Q1 by adding 375% to the actual number) so, I guess you can say things are improving now. According to the BEA, "The increase in real GDP in the second quarter primarily reflected positive contributions from exports, non-residential fixed investment, private inventory investment, and federal government spending that were partly offset by a negative contribution from state and local government spending." Wow, it's a good thing we're going to stop all that government spending because that will fix everything, right?
So a weak dollar a build-up in inventories (and I don't know why they call this a positive when people aren't buying what we are building) and that evil government spending were the only things that kept our nation from contracting last quarter. Inflation was also a big help with the price index up 3.2%, forcing people to pay more money for less stuff - that was America's formula for success in Q2! Our Republican friends will be happy to know that ALL of the increased government spending was military, which went up 7.3% and that swamped a 7.3% decrease in non-defense spending to net a 2.2% total increase in government spending because, of course, we spend 30% more money on defense than non-defense. Come on everybody - sing with me!
On the bright side, perhaps the news is so bad it's GOOD. This should certainly put QE3 firmly back on the table and we know how devaluing the dollar is always a great way to boost the PRICE (not VALUE) of stocks and commodities and looks are everything is in the superficial U.S. markets. It's even possible that the Republicans will take this opportunity to step back and say:
"In light of the weaker than expected economic data, we feel this may not be the best time to cut back on government spending and strip the social safety net away from our society's neediest members as it could, if not done carefully, lead to a total economic collapse."
That would let them back off their insistence on matching cuts to a raise in the debt ceiling and they can extend the limit THE WAY IT HAS BEEN DONE 117 TIMES BEFORE without all the brinksmanship and save it for the 2012 Budget Debate - WHERE IT BELONGS!
Do you think that's going to happen? Of course not because we have elected single-issue psychopaths to Congress and they would rather let this entire nation crash and burn rather than admit that their strategy might not be best for our country. And again, I remind you - what makes you think they don't WANT to wreck the economy. It worded out so well for the Too Big To Fail Financials last time - why not engineer another crisis to wipe out the rest of the competition and have the government hand them another $7Tn in bailouts and loans?
I should be thrilled as we're short. In fact, in last night's $25,000 portfolio update I was wondering if we were too short. Now I'm thinking maybe it was foolish not to bet the farm on the fact that our elected officials are going to allow this country to go straight to Hell rather than sit down like adults and come up with a solution that will benefit our country.
It's a very sad day for America - good luck to all.
Disclosure: I am short USO, IWM, QQQ, DIA, BXP, GMCR, NFLX.
Additional disclosure: Positions as indicated but subject to change (we're cashing in on the bottom and going long for a bounce!)