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Home Publications Blogs Beat the Press The Post Gets It Right on the Debt Downgrade and the Stock Market

The Post Gets It Right on the Debt Downgrade and the Stock Market

Sunday, 14 August 2011 16:35
The Post featured an Outlook piece by Liaquat Ahmat that made the obvious point that Standard and Poor's downgrade could not plausibly be blamed for the stock market plunge. The downgrade most immediately was an assessment of the creditworthiness of U.S. government bonds. These soared in price. The most obvious basis for the plunge in stock prices was the fear of the break-up of the euro and a financial freeze-up of the type that followed the bankruptcy of Lehman in the fall of 2008.
Comments (1)Add Comment
written by Ellen1910, August 14, 2011 8:18
Dean -- please continue to respect your policy of not supplying reasons for stock market movements. There are always many candidates, some doubtless more plausible than others, but none worthy of highlighting.

N.B. The plunge may have been due to the S&P downgrade. See, Keynes beauty contest and the fact that a majority of the participants (in this case, Asians) are always wrong. Or consider the July 31 deadline for hedge fund shareholder redemption letters. And others.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.