We are 15 months from election 2012, and it's not looking good for Obama and the Democrats. Karl Rove has an analysis, "The Debt-Ceiling Debate and 2012." It's largely a technical discussion. Rove notes that the summer debt crisis was of the president's making, since the Democrats failed to pass a budget when they had control of the House, and Obama thought that blame for out-of-control spending could also be apportioned to Republicans. Rove notes as well that tea partiers aren't pleased with the deal and this could create a lot of conflict in the GOP congressional primaries. But from my perspective, the race for the White House is key, and markets are giving us a preview of what to expect over the next year. Democrat Party fortunes will crash harder than the Dow. Recall the Obama won office on economic competence. Voters saw John McCain flailing in October 2008 and Obama looked cool and collected. Now he just looks like a charlatan.
NEW YORK – U.S. stocks plunged in the biggest selloff since the financial crisis, driving the Dow Jones Industrial Average down more than 500 points, as investors appeared to lose faith in the ability of the world's policy makers to revive the global economy and stave off a rolling debt crisis in Europe.
The Dow cascaded lower throughout the session. It finished just off the lows with a 512.76-point decline, or 4.31%, to 11383.68, erasing all its gains for 2011. The slump of the past few weeks has driven the Dow down more than 10% from its May intraday highs, putting the index officially in correction territory.
It was the measure's biggest single-day loss since Dec. 1, 2008, when the Dow plunged 679.95 points at the height of the financial crisis, one of the market's worst days ever.