GOP Facing Voter & Wall Street Backlash From Tea Party's Fake Debt Crisis (Decision 2012)

Tea Party Remains A Driving Force As GOP Leaders Risk Backlash From Movement

Emboldened by concessions wrung from their own leadership and President Barack Obama during the debt limit fight, Tea Party-affiliated lawmakers will likely remain a driving force in the Republican Party -- and possibly induce gridlock until the 2012 elections.

The several dozen fiscally conservative, small-government members in the House played a significant role in forcing John Boehner, the Republican House Speaker, to abandon efforts to forge a bipartisan ``grand bargain'' debt limit deal with Obama because it contained revenue increases -- and their clout will continue, analysts say.

The struggle to avert a catastrophic default ended Aug. 2 when a deal to raise the debt limit was finally struck and signed into law by Obama.

The fight over the debt ceiling exposed a fundamental rift inside the Republican Party between the Tea Party movement newcomers, many of whom believed a debt default was actually needed to get America's spending under control, and traditionalists such as Boehner who said a deal had to be struck to increase the United States' borrowing authority.

A wave of Tea Party-affiliated members was elected to Congress in the November 2010 mid-term elections, propelled by voters furious about a bad economy and government spending.

"This wave hasn't crested yet,'' said Larry Sabato, director of the University of Virginia's Center for Politics.

"The momentum among voters generally is completely about cutting spending. There is this fissure inside the Republican Party -- between the Tea Party absolutionists and the strongly conservative traditionalists -- but they all agree that the debt has to be taken care of.''



'NO MODERATE WING'

Sabato predicted political gridlock and battles until the November 2012 presidential elections.

"The right is energized. They can rally against Obama, healthcare, spending, unemployment, the debt. There is no moderate wing of the Republican Party. The party is very conservative, and is basically in agreement.

"It will remain very conservative and intransigent,'' Sabato said. "What could possibly change them? Why would they cooperate? What's the incentive?''

Stu Rothenberg, an independent political analyst, said Boehner and Republicans affiliated with the Tea Party movement will be able to coexist in the short term.

"John Boehner used to be one of the most conservative members. He came to Washington as a bomb thrower, he wanted to cut government, he wanted to reform things. Now he is the mainstream of the party. That just shows you where the party has moved to.''

Boehner will continue to be forced to consider Tea Party Republican's views, Rothenberg said, ``because he will need their help along the way. The Tea Party will be a significant force throughout the next year and a half.''

But he predicted serious problems if the Tea Party Republicans gain more clout.



"If they are ever in charge -- if the Republicans win the White House or control the White House, Senate and House, you will see civil war break out,'' Rothenberg said. ``The Tea Party will think okay, now we can run the place. They will expect everything they want to be passed. It will be a huge problem for whoever the president is.''

When running for office last year, Tea Party-affiliated candidates advocated cutting government spending, lowering taxes, curbing government regulation of private business, phasing out the Social Security retirement program, dismantling the Education Department and repealing Obama's healthcare reform law.

The Tea Party is a loosely organized conservative movement that gets its name from the 1773 Boston Tea Party anti-tax protest.

POTENTIAL BACKLASH

Others predict a voter backlash against fiscally conservative Republicans in next year's elections, accusing them of bringing the country to the brink of default.

"The electorate will be very different next year because it is a presidential election year,'' said Tad Devine, a Democratic strategist.

He noted that in 2010, independent voters wanted to show they were not happy with the direction of the country and so supported Tea Party candidates -- who once elected may have gone too far.

"But this was not the change they wanted,'' he said. "They have watched what just happened in Washington, that the country was brought to the edge of a cliff with consequences that would have had immediate effects on their lives, and they are astounded.''

"This time round, these Republicans actually have to run on their record. And independent voters will be repulsed by their policy prescriptions and actions.''

Steven Hess, a veteran Republican staffer and a political analyst in the Brookings Institution think tank, said Republicans, who have a 49-seat majority in the House, could lose control of the chamber next year.

"You will have exposed candidates and an enlarged electorate,'' Hess said. ``The Tea Party is a relatively fragile movement. People have already lost interest in it and are getting irritated with it.''

Sources: AP, CNN, Huffington Post, Youtube

Dow Plummets Amid Global Fears From GOP Engineered Debt Crisis! (Tea Party Backlash)

Stocks Down Over 4% in Global Sell-Off

Stocks around the world fell sharply Thursday on intensifying investor fears about a slowdown in global economic growth and worries about Europe’s ongoing debt crisis, which is centered now on Italy and Spain.

Stock market indexes in the United States and Europe dropped more than 4 percent as Japan intervened to weaken its currency and the European Central Bank began buying bonds to try to calm markets.

At the close, the Standard & Poor’s 500-stock index was down 60.27 points, or 4.78 percent, to 1,200.07. The Dow Jones industrial average was off 512.76 points, or 4.31 percent, to 11,383.68, and the Nasdaq was down 136.68, or 5.08 percent, to 2,556.39.

It was the biggest percentage drop since February 2009.

Following accelerating falls over the past two weeks, the stock market is now officially in “correction” territory, defined as a drop of 10 percent to 20 percent since the latest peak.

The S.&P. 500 has fallen 10.6 percent since its recent high of 1,363.61 on April 29, underlining the new negative investment sentiment about the economy and Europe.

“We are now in correction mode,” said Sam Stovall, chief investment strategist at Standard & Poor’s. “We could have another couple of weeks to go before it bottoms.”

The last time the market was in a correction was last summer, when it fell 16 percent before recovering.

A fear haunting markets is that the United States economy may be heading for a double-dip recession. And even after a second major rescue package for Greece and the agreement to raise the debt ceiling in the United States, investors are concerned that world leaders have not done enough to address fragile underlying economic growth, while Europe’s debt problems have moved on to the much bigger economies of Italy and Spain.

Mohamed El-Erian, chief executive of the bond giant Pimco, said investors were selling risky assets like stocks “globally prompted by concerns about the weakening economic outlook, spreading contagion in Europe and insufficient policy responses.”

With Thursday’s dive, the three major American indexes had erased all of the gains made so far in 2011, with the S.&P. and Nasdaq markedly below the start of the year.

In afternoon trading, the Dow, an index of 30 blue-chip stocks, was about 9.4 percent off of its most recent closing high of 12,810.54, reached on April 29. But it was 18 percent below its all-time high of 14,164.53, on Oct. 9, 2007.

Since the beginning of 2008, there have been 17 days with drops of 4 percent or more – 13 in 2008 and 4 in 2009.

Unnerved by policymakers’ apparent inability to get ahead of Europe’s festering debt crisis, European stock markets turned sharply negative across the board.

In Britain, stocks closed down 3.43 percent. In Germany, the DAX index dropped 3.4 percent. In France, the CAC 40 closed down 3.9 percent.

“This is the worst it has been in Europe,” said Jens Nordvig, currency economist at Nomura Securities in New York. “The current rescue package was not enough to cope with the size of the problems posed by Italy and Spain. We need a new framework that can cope with those two countries, and without it markets are on their own and are falling.”

Major indexes in Italy, Spain, France and Switzerland all closed Thursday more than 20 percent below their 2011 highs, while Germany was off nearly 15 percent and Britain’s decline was more than 11 percent.

The selling has extended to many other markets. Mexican stocks are off almost 14 percent from their highs earlier this year, and Brazil’s major index has lost more than a quarter of its value.

Yields on Italian government bonds, already above 6 percent, rose sharply, adding to concerns that the nation’s current debt position is unsustainable. Yields on Spanish debt also increased. This was despite large-scale intervention by the European Central Bank, which for the first time since March began buying bonds in an apparent attempt to prevent the region’s sovereign debt crisis from engulfing Italy.

The markets had expected some concrete action from Prime Minister Silvio Berlusconi on Italian’s worsening debt situation in public remarks late Wednesday. But they were disappointed when he defended the country’s fundamentals and said current packages were enough to foster economic growth. The Italian stock market opened up but then slipped sharply.

Since many of Europe’s banks hold the bonds of countries like Italy and Spain, concern is turning to the health of the banking system as these bonds drop in value. With warning signs flashing that some European banks are struggling to fund themselves in increasingly expensive credit markets, the E.C.B. also moved to help weaker banks by expanding its lending to institutions in the euro area at the benchmark interest rate. Bank stocks nevertheless fell sharply in Europe.

Jean-Claude Trichet, the president of the E.C.B., said the bank had acted in response to “renewed tensions in some financial markets in the euro area.”

He said that uncertainty created by the debate in the United States to raise the debt ceiling had unnerved European markets as United States investors had become increasingly reluctant to lend to European banks. “It’s clear the entire world is intertwined,” he said. “What happens in the U.S. influences the rest of the world.”

But the E.C.B.’s steps were not enough to help Europe’s bond markets.

Laurent Bilke, an analyst at Nomura in London, said the E.C.B. had been buying government debt of Portugal and Ireland in order to calm these markets. But it had not been buying Italian and Spanish government debt, and that had unnerved investors.

He said the E.C.B. council had also not been united in its decision to take extraordinary measures to intervene in the markets, and that fact had spooked markets.


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Sources: AP, CNN, NY Times, White House, Youtube, Google Maps

Wall Street Reacts To North Korea's Attacks: Dow Drops 142 Pts

Dow Falls 142 Points On Korean Worries


U.S. stocks were pummeled today, with the Dow Jones industrials ($INDU) briefly falling below 11,000, in the wake of North Korea's apparent shelling of a South Korean island.

The American slump followed the reaction of markets around the world to the Korean news. Three more worries weighed on stocks: whether Europe could contain the Irish debt crisis, a weak report on existing-home sales and a cut in the Federal Reserve's economic outlook.

The dollar, gold and silver all rallied as some investors sought safe havens for their cash.

The Dow closed down 142 points, or 1.3%, to 11,036, after dropping as many as 186 points early in the session. The Standard & Poor's 500 Index ($INX) fell 17 points, or 1.4%, to 1,181, and the Nasdaq Composite Index ($COMPX) was off 37 points, or 1.5%, to 2,495.

Gold settled up $19.90 to $1,377.60 an ounce in New York. Silver settled up 11.1 cents to $27.572 an ounce. Copper, however, settled down 4.9 cents to $3.7025 a pound.

The U.S. Dollar Index, which measures the greenback against a basket of currencies, was up 1.3% to 79.81. The dollar rose against the euro, British pound and the Japanese yen. The biggest gain was 1.7% against the euro.

Crude oil was down 49 cents to $81.25. Crude had fallen to as low as $80.28. early in the day.

The dollar's gain also pushed interest rates lower, with the 10-year Treasury yield falling to 2.762% from 2.813% on Monday.

Futures trading suggests a slightly higher open on Wednesday. The day includes reports on initial jobless claims and personal income and spending. Deere (DE) and Tiffany (TIF) will report quarterly results.

Jury: SAP owes Oracle $1.3 billion

After hours, a federal jury in Oakland, Calif., ruled that German software maker SAP (SAP) should pay $1.3 billion to rival Oracle (ORCL) for copyright infringement. Oracle shares jumped 1.3% to $27.54 after hours after dropping 3.1% to $27.19 in regular trading.

SAP had admitted liability for the actions of a now-shuttered SAP subsidiary called TomorrowNow.

TomorrowNow, which provided software maintenance and support to Oracle customers, illegally downloaded Oracle software and documents, infringing on 120 copyrights. SAP had argued its liability was $40 million. Oracle wanted $288 million to $3 billion. SAP, whose shares fell 1.4% after hours to $48.02 in New York, may appeal.


Sources: MSN Money, MSNBC

Dow Hits 11,000 First Time Since May 2010! What's Next?

Dow 11,000: What To Do Now??


The Dow Jones Industrial Average just traded above 11,000 for the first time since May 3.

What is about these round numbers?

They tantalize us, even though we know 10,000 or 11,000 is just a number, it’s a milestone that means something. In this case, Dow 11,000 signifies a long and painful slog from March 2009, when the Dow touched 666, yet far from the all-time high of 14,164, reached almost exactly three years ago, on October 9, 2007.

The first time the Dow breached the 10,000 mark was May 3,1999. For those of you keeping score, it might seem like we’ve gone nowhere over the past decade, but if you diligently rebalanced your diversified portfolio throughout the years, you should be OK.

When the Dow crossed for the first time after the financial crisis, it was almost exactly a year ago, on October 15, 2009. Here’s a segment that I did with Katie Couric and Anthony Mason on the CBS Evening News, where we talked about both the symbolic nature of the number and how to think about it going forward.

Experts will guffaw at this and note that our obsession with round numbers is just another example of allowing emotions to guide our investing. I prefer to use the emotional stirring as an excuse to get people to act! After all, the addition of 1,000 Dow points in the last year is a great opportunity to take control of your financial life!

Open your statements
Review where you stand
Take Risk Assessment
Re-balance according to personal goals
Beef-up cash for near-term funding

If you work with a broker or an advisor, you should:

Schedule appointment to review progress
Confirm how much service costs
Review and update your plan
Consider replacing managed funds with index or exchange-traded funds


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Sources: CBS News, CNN, MSN, Google Maps