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At first, President Obama had no public events on his schedule Monday. Then, after markets opened down sharply, the White House announced Obama would speak at 1 pm. Then 1:30. Then he finally emerged at 1:52. By that time, the market had dropped 410 points. Obama then said absolutely nothing new. He attacked S&P’s downgrade decision, something his aides had already done. He blamed Republicans for the downgrade, something his surrogates had already done. And he called for extending unemployment benefits, extending the payroll tax cut, more infrastructure spending, and higher taxes; all policies he has been pushing for months.
Later, the White House press corps pressed spokesman Jay Carney on whether Obama would be unveiling a deficit reduction plan “in a form of being scorable by the Congressional Budget Office.” When Carney demurred, Politico’s Glenn Thrush asked: “You said he will be contributing to the process, talking about the super committee, but he won’t be leading it. He is the leader of the free world. Why isn’t he leading this process?” Carney responded: “Glenn. Look, this President, his leadership on these issues is quite established.”
Quite established to whom? After Obama’s statement, the markets fell another 210 points. Obama is unwilling to call Congress back from its August recess and push for a larger stimulus agenda because he fears alienating already skeptical independents. But he can’t bargain constructively on deficit reduction with Republicans because liberals will abandon him if he pushes for real entitlement reform. As a result, Obama is paralyzed politically. All he can do is watch the market, and his reelection chances, drop.
Around the Bigs
The New York Times, Stocks Suffer Sharpest Drop Since 2008: As investors were forced to sell shares to meet margin calls from lenders, the Dow Jones industrial average fell 634 points, or 5.6 percent, and the Standard & Poor’s 500- stock index dropped 6.7 percent, the biggest slides since 2008′s financial crisis. “The cause of all this was the marking down of growth expectations,” Barry Knapp, strategist at Barclays Capital told The Times. “It has morphed into one giant global growth recession concern.”
The Wall Street Journal, Downgrade Ignites a Global Selloff: Monday’s market drop continued into Tuesday across Asia as South Korea’s Kospi Compostie, Japan’s Nikkei Stock Average, and Hong Kong’s Hang Seng all fell sharply.
The Wall Street Journal, Obama Bid to Boost Confidence Falls Short: The Dow Jones Industrial Average had fallen almost 410 points when President Obama began speaking yesterday. It fell about 20 more points during his 11-minute address and ended the day down 634. “A lot of the people I spoke with felt that it was just more of the same,” Keith Bliss, senior vice president at Cuttone & Co., told The Journal. “Tell us something we don’t know.”
The Wall Street Journal, Fear Returns for U.S. Banks: Bank stocks were among the hardest hit Monday, falling 11 percent, as some saw the cost of insuring bonds against default by up to 50 percent. “This is not Lehman II,” James Bianco, president of Bianco Research LLC, told The Journal, but “if banks’ function is to facilitate credit, this makes it harder for them.”
The Wall Street Journal, Verizon Strike Turns Nasty: Verizon accused striking Communication Workers of America union members of vandalizing equipment and preventing replacement workers from entering job sites Monday. The union fired back with accusations that nonunion employees tried to run into strikers with their vehicles.
The Wall Street Journal, Freddie Says Loss Narrows: Freddie Mac announced they only lost $2.1 billion last quarter, which is more than $2 billion less than the $4.7 billion they lost in the second quarter of 2010. Freddie said they would only need $1.5 billion from taxpayers to survive next quarter.
The Los Angeles Times, EPA set to miss deadline on ozone rules: The Environmental Protection Agency again delayed, for the fourth time since 2010, its new ozone regulations. The proposed rule, supported by environmental groups, would inflict an estimated $90 billion in costs on manufacturers and consumers annually.
Milwaukee Journal Sentinel, Milwaukee to see net gain from state budget:
Despite early criticism from Democrat city officials, Milwaukee will actually gain more than it will lose next year from Gov. Scott Walker’s budget bill. The changes to union collective bargaining privileges will save the city $36 million in lower health benefit costs in 2012 while it only cut state aid to the city by $14 million.
Campaign 2012
Wisconsin: Six Republican state senators will face a recall votes in Wisconsin today. Republicans currently hold a 19-14 advantage in the Senate, so Democrats only need to win three out of the six elections to win control. But the Democrats victory could be short-lived. Two Democratic state senators face recall elections next Tuesday.
Perry: Texas Gov. Rick Perry plans to overshadow Saturday’s Ames Straw Poll without even showing up. Perry will reportedly reveal his intention to run for president that day from the RedState conference for conservative activists in South Carolina.
Perry II: The Austin American-Statesman reports that Perry received $72,687 in agricultural program payments between 1987 and 1989 and another $9,624 between 1991 and 1998. The paper asks, “Will subsidies to farmer Perry come back to haunt presidential hopeful Perry?”
Pawlenty: Former Minnesota Gov. Tim Pawlenty continues to try and attack President Obama and rival GOP candidate Rep. Michele Bachmann, R-Minn., with the same inexperience argument. At Rich’s Brew in Johnston, Iowa, Pawlenty told a small gathering: “The notion that you are going to put somebody in the Oval Office and make him or her president of the United States, commander in chief, leader of the free world, when the person had never run anything before in their life, is really irresponsible.” Terry Madonna, director of the Franklin & Marshall College Poll, tells The Examiner, that Iowans may not be the best audience for Pawlenty’s message: “I think part of the problem for Pawlenty is the nature of the electorate in Iowa. It is 60 percent Christian conservative and these are the folks that are likely to turn out. I just don’t think he has the same bona fides with Christian, pro-life conservatives as Bachmann does.”
Righty Playbook
Rush Limbaugh called yesterday’s market crash “Barackalypse Now!” and described Obama as “Debt Man Walking” in 2012.
Professor Steven Horwitz, Chair of St. Lawrence University’s Economic Department, has issued an open challenge to Rachel Maddow to debate the topic, “The Great Depression was caused by laissez-faire capitalism and cured by big government” live on her show.
RedState’s Erick Erickson denies he knows anything more about Texas Gov. Rick Perry’s presidential ambitions than what he reads in the newspapers. He does remind readers that Perry will be speaking at 1:30 pm at the RedState Gathering in Charleston, South Carolina on Saturday and that tickets are still available.
Lefty Playbook
Digby is horrified by news that the White House is refusing to pursue another stimulus on fears that the push would ignite another panic: “If this country is going into another recession, Democrats putting their heads in the sand and pretending like nothing’s happening isn’t going to work any better than it’s been working since the Green Shoots of 2010. They just can’t be this strategically myopic.”
Brad DeLong argues that Obama should respond to the threat of a double-dip recession by appointing a new Treasury Secretary, Federal Reserve Chairman, Council of Economic Advisers Chair, and Assistant to the President for Economic Policy.
Talking Points Memo‘s Josh Marshall worries that it feels like the 70s again: “With the mix of roiling economic crises, mushrooming riots spreading across the United Kingdom, it’s hard not to think we’ve been transported to a different decade, a different era. And certainly not a better one.”
