"DOW Drops 500+
I thought the "Deal" was supposed to forestall this?

The Great Reckoning continues."

B.S. Look you got the CBO to certify that you had 2.1 Trillion in cuts over 10 years.

This means that ceteris paribus you will have 2.1 trillion fewer dollars floating around in the economy in 2021.

How to value a stock? (thousands of ways) but the bedrock principle is that a stocks value is some multiple of future earnings. These future earnings will be denominated in dollars. The price one is willing to pay for a stock takes into account not just its current P/E, but its future P.E. Lower future earnings equals a lower justified Price for those future earnings.

Given that C is weak, and G just got a lot weaker I am not suprised by any of the market action this week.

In fact I have been telling democrats who figured there would be a bounce to forget about it. I was right, I won my VIX bet.

This debt ceilling deal with real budget cuts and guaranteed tax raises, provides more clarity than you think, and it provides it to the downside.

The dismal economic picture WILL get worse from here, forcing cuts in government spending starting next year that will likely trigger more layoffs in both the private sector and state and local governments.

Unemployment WILL climb.

What we don't know is what other cuts will come along, but what we do know is that America's experiment in pretending it is Greece eventhough it is not, and is monetarily sovereign will put even more pressure on leading innovator states like California to make budget cuts that are pound foolish and penny wise.

The deal that would have put +500 on the Dow and made it an +1000 week vs. a -1000 week would have been this.

1) Raise Debt Ceilling by 50 Trillion, or even better eliminate it altogether.
2) Eliminate FICA.
3) Fund the FAA
4) send out a $1 Trillion payment to the states distributed on a per capita basis.

Dr. Krauthammer was an aide on the Domestic Policy Staff of Mr. Carter's White House and also wrote speeches for Walter Mondale. Hubert Humphrey had already died.

Correction appreciated--situation was worse than I had thought.

"This means that ceteris paribus you will have 2.1 trillion fewer dollars floating around in the economy in 2021."

You believe the $2.1 trillion of private wealth that the government will not take in through taxes will be placed under a mattress?

While I wish the GOP had done a better job, I think they did quite well considering that they only control the House. Back in 2010 when the GOP swept to victory, my only hope was that they could thwart Obama's grand schemes. Yet they have accomplished much more.

It is also important to remember than this was a perilous situation -- the GOP/conservatives/tea partiers were in danger of being blamed for another government shutdown (and we saw how that played out back in the 1990s). Had they toed the TP line throughout, this could well have backfired. So, I think we should look at this as incremental progress. If we can get rid of the empty suit and his minions in 2012, then we can really hit the accelerator on a variety of fronts. Currently we are simply too weak to insist on ideological purity.

Raising the debt ceiling was never going to forestall crisis, but at least Republicans exacted a price and laid the basis for future additional cuts of real substance. It is because the Democrats ill spent trillions of dollars that we are in financial trouble, not that Republicans managed to squeeze some cuts from the Democrats. Raising the debt was not a solution but a surrender, which Republicans did not have the hopes to prevent altogether but to which recorded their collective dissent. More and bigger battles this year and next are in store. S & P's ratings drop just indicates we are not there yet, and can't be as long as Democrats hold as much power as they currently do.