Well, it wasn’t a crash like I predicted, but it does look pretty much like a crush. This is a chart of the Dow Jones Industrial Average from July 21st-27th.
Something to note about the graph…note the huge drops due to “overnight” trading (those are the big gaps where the DJIA opens well lower than where it closed). That’s when the rest of the world takes over for the global economy, and then we open up the floor for trading and recalculate the price of things. What we’ve seen over the last five days is a steady erosion in investor confidence. This is directly due to a manufactured political debt crisis that went critical last Friday.
This will continue, if not accelerate, until we get a deal done. There is real and palpable damage being done RIGHT NOW to our economy thanks to this idiocy. One side understands that, and is willing to compromise to get things right. The other side is split. Some of them get it, others are hoping, literally, that we crash and burn, somehow thinking this will be better in the long haul. This is kinda like thinking that blowing out a knee in college is, somehow, absolutely awesome for the prospects of someone who wants to be a professional athlete.
There was, before this whole episode, a large and growing contingent of countries that think using the Dollar as a reserve currency is looking more and more like something that shouldn’t be done any more. It’s hard to explain to people who can’t understand how defaulting on our loans would be bad, that losing this *very* privileged and unique position would cause further harm to the economic prospects of everyone in this country.
We get a fairly large dividend by underwriting the global economy. We are going to lose that dividend, and soon, as more and more evidence is added to the pile that says we are simply not functional enough as a political entity to deserve that pedestal.
If you want a nice and stark piece of data to use to mark the end of the American economic dominance, that’s the one. And we are now rushing towards it…and half the crew doesn’t even believe it exists.