Bad Economic News Triggers Stock Plunge

The stock market is slipping rapidly -- again -- on some really bad economic news.
More Americans than forecast filed applications for jobless claims last week, suggesting that the labor market is struggling two years into the economic recovery. Claims jumped by 9,000 to 408,000 in the week ended Aug. 13. That's the the highest number in a month.
Inflation also seems to be on the horizon and double-dip recession fears are in the news again.
Here's how Joachim Fels, who co-heads Morgan Stanley's global economics team puts it:  "Our revised forecasts show the US and the euro area hovering dangerously close to a recession — defined as two consecutive quarters of contraction — over the next 6-12 months."
And all this is happening as President Obama begins his vacation on Mahtha's Vineyahd.

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Invest In Beer? Think About It . . .

If you bought $1,000 of shares in Delta Airlines one year ago, you would have $49.00 today.
If you bought $1,000 of shares in AIG, you would have $33.00 today.
If you bought $1,000 of shares in Lehman Brothers, you would have $0.00 today.
But, if you bought $1,000 worth of beer... Drank all the beer and turned in the aluminum cans for recycling, you would have $214.00 today.
Therefore the best current investment plan is to drink heavily & recycle.

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Downgrade Mess: Who's REALLY At Fault?

The blame game is underway.
And the fingers are pointing in all directions.
But the fact remains that America's credit rating has been downgraded for the first time in our nation's history.
You may be tempted to direct blame at any one of a number of targets. As I write this the White House is out to pin the blame on both Standard & Poors (S & P) and the Tea Party movement. That's an unlikely duo: a ragtag group of disorganized, ordinary Americans and the highly-structured hierarchy of bean counters at S & P.
You can point the blame wherever you want if blaming is your thing.
But before you direct your pointed finger, consider the following figures from Obama's own budget office:
In 2008 (the last full year of President Bush) federal spending was 20.7% of the gross domestic product (GDP) and public debt was 40.3% of the GDP.
As soon as President Obama took office, the spending accelerated and the federal debt figures began to climb out of all proportion. Federal spending jumped to 25% of the GDP. And debt as a percentage of GDP jumped to 53.5% in 2009, 62.2% in 2010 and is estimated to hit a whopping 72% this year. This all happened during Obama's watch.
On top of all this, as the Wall Street Journal has pointed out: "Rather than change direction this year, Mr. Obama's main political focus has been to preserve those spending levels by raising taxes."
But these levels sinmply cannot be sustained.
This is not the first time a president has come into office and inherited a mess. Ronald Reagan faced almost precisely the same situation in 1981. But as professor Robert Barro of Harvard University has pointed out: "Reagan focused on implementing good economic policies, not on blaming his incompetent predecessor for the terrible economy he inherited,"
By contrast, Dr. Barro says Obama "has pursued an array of poor economic policies, featuring the grand Keynesian experiment of sharply raising federal spending and the public debt."
Before you start spreading the blame every which way but Sunday, remember these figures, heed Dr. Barro's words and take another look at that sign that Harry Truman kept on his desk -- the one that says "The buck stops here!"

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