And, on the eighth day, the Dow fell. Again.
As the US Senate passed, and President Barack Obama signed, the hostage ransom Republicans had demanded to raise the nation's credit limit, the other shoe, in the form of major stock indices around the globe, dropped, with the Dow Jones Industrial Average falling for the eighth consecutive day, the first time that had happened since October of 2008.
Folks ought to remember October, 2008. That was the last time Republicans destroyed the global financial system.
The last time the Dow fell nine days in a row was in 1978.
The Dow Tuesday fell 265.87 points, more than 2%, leading all the major indices downward. The Standard and Poor's 500 index fell 2.56%. The NASDAQ was down 2.75%. Across the pond, London's FTSE 100 fell .9%, France's CAC 40 fell 1.56% and Germany's DAX was down 2.1%
Since July 21, when the Dow closed at 12,724.41, the index has dropped 857.79 points.
Far from buoying confidence in the markets with the promise of fiscal austerity, the debt ceiling deal has crumbled whatever confidence there was with its threat of fiscal austerity.
Close on the heels of yesterday's disappointing June manufacturing report, the US Commerce Department reported personal spending fell .2% last month, the first decline since September 2009. Analysts had expected a gain of .1% to .2%.
And, as the consumer of first resort was found to be tapped out with moths fluttering from their pockets, the consumer of last resort, the great United States federal government, was signing a document that promised it, too, would be raking $2.8 trillion worth of chips off the table and going home to sulk.
Furthermore, that same document precluded the government putting any more chips on the table for a very long time.
Money moguls across the land, who days earlier had been pushing House Speaker John Boehner's (R-OH) even more draconian Republican bill to curtail government spending, found themselves contemplating high parapets as indices fell around the world, shrinking portfolios with them. It was just beginning to sink in that cutting federal spending equalled tumbling sales, and tumbling sales equalled fewer profits, or, gawdferbid, a massive, cascading tidal wave of losses.
Karma, that hot Goth dominatrix with the boots and the leather and the whips and the red hot branding irons, was flicking her riding crop and getting ready to tell everyone what bad little children they'd been, and to flay the skin off their backs.
"We get no default," said Myles Zyblock, chief strategist at RBC Capital Markets, "but the bad news is there is a growth trade off. They had to agree on fiscal contraction that would weigh on growth."
"Economic data has been a disaster," Uri Landesman of Platinum Partners stated the blindingly obvious as though he hadn't been aware of the situation. "It's clunker after clunker."
The drop in consumer spending was the bullet to the skull following the firing squad volley of poor manufacturing data, unemployment rising to 9.2%, and a dismal 18,000 jobs added to the economy in June. And now, the federal government, at Wall Street's very behest, was saying it wasn't going to be around to shovel dumptruck loads of cash into their troughs anymore.
It's one thing to tell economic Lilliputian Greece to cut spending and eat its peas. It's quite another to make America do the same, particularly when you're a fat leech hanging off the side of the world's biggest economy and completely dependant on the vitality flowing through its veins.
Not that right-wing idiot logs have the vaguest notion of the situation.
"The way forward is not more spending, greater debt and continued zero-interest rates, but spending control and a return to free market principles," pontificated John Taylor, the senior fellow at Stanford University's Hoover Institute who makes the right-wing talk show rounds, not the 49er wide receiver who won all those Super Bowls with Joe Montana and Jerry Rice. Which goes to show why no one should listen to an economist whose day job is to push economic policies championed by Herbert Hoover.
If the money moguls and tycoons thought paying income taxes was bad, wait until they see what happens when they have no income to pay taxes on. And, not in the clever loophole-and-shelter way of having no income, but in the real, red-ink and froth-mouthed stockholders brand of having no income. Income tax is nothing compared to out-go tax, where you have to sell off your Chagalls, and your trophy wife runs off to the Caymans with the pool boy and the passwords, and you find yourself staring down at Lexington Avenue from the sixty-sixth floor while investors and SEC auditors scream at you through the door.
Shudda paid a little more in taxes and had people smarter than you develop the technologies and markets and innovations of the future that would have kept the engines of commerce turning, and the pool boy in his place. Shudda paid for a little more stimulus and had manufacturing and transportation and sales and consumer showrooms humming. Shudda paid a fair share so more first responders would have gotten to you quicker after you hit that Mercedes parked on the corner.
Maybe there's still time to wander outside and stand on a street corner in your grubby Armanis plaintively waving a tattered cardboard sign that says, "Will arrogantly bellow self-serving demands for food."
Every economist who isn't being paid by Fox News to push right-wing ideology knows in bad economic times, the government has to be the consumer of last resort, as there are no other consumers left to create demand. Every economist who isn't being paid by pricey, exclusive private universities to make sure the young'uns in the frat and sorority houses drink the supply-side kool-aid knows business won't be ramping up production and hiring as long as there's no demand out there.
Now, that demand has been cut off, and there's nowhere for the economy to go but down.
Right into the roof of that silver Mercedes parked on the corner of 53rd and Lex.