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Stocks plunge as debt talks near collapse

The stock market was not exactly surprised that the so-called supercommittee failed to reach a deal to cut the federal deficit. But since summer, investors have bought at the first sign of hope and sold at the first hint of trouble.

So on Monday, they sold big.

The Dow Jones industrial average was down as much as 342 points after the special committee of Congress assigned to come up with $1.2 trillion in deficit cuts over 10 years indicated that there would be no deal.

“They’re essentially giving up,” said Robert Robis, head of fixed income macro strategies at ING Investment Management.

The supercommittee stalemate is supposed to trigger automatic spending cuts across the government, but there were already hints that Congress would find a way around them. Analysts say that could lead to another downgrade of the U.S. credit rating.

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  • CAllenDoudna

    Well, there goes OblahBlah’s “Recovery”.

  • Rosco1776

    End the madness, vote Ron Paul 2012!!

    • Tom


      Have you truly looked at the records and backgrounds of those running to be President? Most are simply varrying versions of obama, from the inexperienced and relatively unknown, to the islamic supporting and illegal alien embracing to the fascist/communist variations. Why not really stop the madness and throw them all out and replace them with people with no political connections or motivations at all? Only by cutting out the political federal government tyrannical disease by the roots and getting rid of both the politicians and their handlers will we ever be able to stop the entrenched scum who see themselves as the elites who dominate us and replace them with our equals who would truly work as our employees and represent us without private ambitions or ruinous intent. The lawful rights to Secession under the U.S. Constitution as relates to secession of the United States as a whole from the corrupt and coopted federal government led by the tyrant at the top is the only lawful and moral way to preserve our republic.

  • http://comcast Lee Bird

    All our congressman are millionaires or will become millionaires as they recieve privilege information on stock issues which we due not have access to. This will be a no lose situation for them even though nothing has been settled on debates.

  • Oathkeeper

    How can any markets operate normally when the banks are are so corrupt and defrauding millions of people? If the banks don’t have the money they say they do the economy will plummet.
    On what the ECB will do:
     ”The ECB has expanded its balance sheet mightily under Trichet. We have a new leader and we have a new imperative. I dare say Europe is going to print money.”
    On central bank monetization and its implications:
    “The Italian yields did not fall on their own. It raises questions of overall integrity of market prices. In the US the Fed has nationalized the yield curve. In Europe much the same is going on: the SNB is expanding its balance sheet at astonishing rates of speed. The world over there is seeing immense money printing and there is a huge race to debase on the behalf of the sponsors of paper money.”
    Central banks are insolvent:
    “The ECB has a ratio of non-AAA rated assets to equity of 14 to 1. What the ECB has been doing is stepping in where private money fears to tread. In the private sector we call that heading for trouble… The New York Fed is leveraged 100 to one.”

  • Patriot7

    This shows that the politician lawmakers just don’t know what to do. Putting 6 liberal Dems and 6 conservative Repubs together was a non-starter from the word go. The stock market is merely reflecting the uncertainty of the economic status of our country and shows how volatile the market is right now. Perhaps now that the threat of automatic spending cuts is looming on the horizon the powers that be will finally buckle down and make some hard choices about spending cuts and and revenues.

  • John Hardman

    Even at this late date there are many “Babes in the woods” that really believe that Obama is honestly trying to pull this Country out of these tough economic times. These folks are not only a tad gullible, trusting and strung out on the Political Correctness epidemic that as decended like a Biblical plague upon our Country.
    Here are the unvarnished facts for those who have never even considered for a moment that our misbegotten President Obama might not be as you would have him be. Obama is a “Wolf in Sheeps clothing” who fully intends to reduce this Country to killing one another in the streets (just like what’s going on in many other Countries as we speak.) He will then hand over what’s left of this country to Marxist Socialist Leaders that are already waiting in the wings.
    It’s not too late to get the cobwebs out of your brain cage and start wising up to the grim reality of what’s up today as we remember our proud past History on Thanksgiving Day 2011.
    Get with the growing number of elightened citizens who are going to impeach this faux President now sitting and grinning in the White House.

  • Dougie

    So, when the U.S. government needs to borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes.

    The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds for themselves (which happens a lot these days).

    So that is how the U.S. government gets more green pieces of paper called “U.S. dollars” to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on.

    So every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger.

    Are you starting to get the picture?

    As you read this, the U.S. national debt is approximately 12 trillion dollars, although it is going up so rapidly that it is really hard to pin down an exact figure.

    So how much money actually exists in the United States today?

    Well, there are several ways to measure this.

    The “M0″ money supply is the total of all physical bills and currency, plus the money on hand in bank vaults and all of the deposits those banks have at reserve banks. As of mid-2009, the Federal Reserve said that this amount was about 908 billion dollars.

    The “M1″ money supply includes all of the currency in the “M0″ money supply, along with all of the money held in checking accounts and other checkable accounts at banks, as well as all money contained in travelers’ checks. According to the Federal Reserve, this totaled approximately 1.7 trillion dollars in December 2009, but not all of this money actually “exists” as we will see in a moment.

    The “M2″ money supply includes everything in the “M1″ money supply plus most other savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000). According to the Federal Reserve, this totaled approximately 8.5 trillion dollars in December 2009, but once again, not all of this money actually “exists” as we will see in a moment.

    The “M3″ money supply includes everything in the “M2″ money supply plus all other CDs (large time deposits and institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements. The Federal Reserve does not keep track of M3 anymore, but according to it is currently somewhere in the neighborhood of 14 trillion dollars. But again, not all of this “money” actually “exists” either.

    So why doesn’t it exist?

    It is because our financial system is based on something called fractional reserve banking.