On Thursday, August 4, the Dow Jones Industrial Average fell 512 points, the biggest stock market drop since the collapse of September 2008.
Why? Weren’t the markets supposed to rebound after the debt ceiling agreement was reached on Monday, avoiding
So we were told, but the market apparently understands what politicians don’t: the debt deal is a death deal for the economy.
Reducing government spending by $2.2 trillion over a decade, as Congress just agreed to do, will kill any hopes of economic recovery. We’re looking at a double-dip recession.
Today the idea has gone mainstream. It is covered by NY Magazine, CNBC, and The Economist. Even Nobel economist Paul Krugman of the NY Times has weighed in. Annie Lowrey of Slate discusses it as one of several gimmicks the government could use to resolve the debt-ceiling debacle. Krugman added:
Spending More While Borrowing Less