Recently, I wrote about the market wanting to take profit when the “news” was bad, even if the news was inconsequential, ultimately. The excerpt below and the market action today exemplify the opposite of that – if there is no bad news, the money goes in.
LISBON, Portugal – Tensions over Europe’s simmering debt crisis eased slightly on Wednesday as ailing Portugal, viewed as the next candidate for a bailout after Greece and Ireland, showed it can still raise money on international markets and the EU proposed to boost the size and powers of its rescue fund.
If you remember, the market dropped on the news that Portugal’s debt might be insurmountable, which raised fears about all of Europe (again). Howdy Doody, imagine that … Somehow, some way, that Portugal debt thing isn’t such a big deal after all, now is it?
What is a big deal though is the raising or not raising of the debt ceiling. In fact, this just might become the biggest deal to come along since the financial crisis and market collapse of 2008, and the scary thing is that the American public simply does not comprehend the gravity of the issue.
WASHINGTON (Reuters) – The U.S. public overwhelmingly opposes raising the country’s debt limit even though failure to do so could hurt America’s international standing and push up borrowing costs, according to a Reuters/Ipsos poll released on Wednesday. Some 71 percent of those surveyed oppose increasing the borrowing authority, the focus of a brewing political battle over federal spending. Only 18 percent support an increase.
I understand that politicians don’t always listen to the American public, and that is a good thing, as the American public often reacts to issues on a visceral or naïve level, which is a problem when it comes to complex issues. Simple sound bites and bumper sticker responses often fill the minds of the American public generally because the American public, simply, is not educated enough to answer a question about raising the debt level. If the public truly understood what an American default on its debt would mean to the global economy, they would not support the action, not for one minute. But because the Republicans demagogue the issue, not raising the debt ceiling seems to make perfect sense as a concrete first step toward reducing our debt.
Now, more than ever, on this issue, we need our politicians to ignore the American public, and we desperately need the media to point out the reality and potential consequences associated with this issue. Defaulting on our debt would do so much more than “hurt America’s international standing and push up borrowing costs.” This statement points out why the American public is poorly educated about this issue. My hope is that our elected officials are smart enough to see this, and that they are smart enough to understand the issue itself. I don’t know, this hope just might have the same outcome as spitting into the wind.
Trade in the day; invest in your life …
