This period of slower economic activity is an adjustment that needs to happen. As people tighten their belts what they are doing is paying their bills, putting money away for future needs in case of job loss, and being more careful on how they spend their money. The result is the debt and equity bubble is being paid off which is what must happen to free up money for future purchases.
It is simple and necessary. This cry for people to just keep spending is irresponsible. It is the free markets at work resetting itself. The government’s meddling is only going to lengthen the process that it will take to create liquidity again. Even if the money is made available to borrow (which it is there for credit worthy people) many people are choosing not to spend. And that is their choice that is the market.
What the government spending bill is doing is adding to people’s debt even though they are not willingly taking that debt on. In other words they are working against the market by forcing more borrowing on the taxpaying consumers. It’s like giving the government your credit card for a spending spree. It’s that simple and that concerning.
That is why Wall Street reacted the way they did today; negatively. They know what’s going on here and they don’t like it. Neither should you…