When President Barack Obama started speaking at the White House at 1:52 p.m. today, the Dow Jones was down around 400 points. When he wrapped up 10 minutes later, it was down around 430 points. And when the market closed at 4 p.m., the Dow was down 635 points for the day – a drop of more than 5.6%. The tech-heavy Nasdaq index was down nearly 6.9% for the day. The S&P 500 was down 6.7%. In short, it was a horrendous day on Wall Street – as it was earlier in Europe and Asia.
It’s certainly not fair to blame only the president for this awful downslide. There are limits to what he can do in the current economic and political climate. There is plenty of blame to go around – including to congressional Democrats and Republicans, liberals and conservatives.
But it’s also clear that Obama and his top advisers are focusing much more aggressively now on steps he might be able to take to try to turn things around. In his remarks today, he said he would soon be coming up with new recommendations for the proposed congressional super committee of 12 members who are supposed to come up with new deficit reduction plans. The president said they should include increased tax revenue – meaning higher taxes on the wealthy – and “modest adjustments” to Medicare. Conservatives won’t like higher taxes; liberals won’t like Medicare cuts.
By the way, it wasn’t just Standard & Poor’s downgrading of the U.S. credit rating from AAA to AA+ that caused today’s market collapse. The markets have been falling steadily and ominously for two weeks. Investors in the United States and around the world have lost trillions of dollars in equity. Their portfolios have suffered big time, and no one can say when this slide will stop.
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