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Home Publications Blogs Beat the Press USA Today Roots for a Market Plunge in Response to Budget Negotiations

USA Today Roots for a Market Plunge in Response to Budget Negotiations

Monday, 10 December 2012 06:14

I'm not kidding, it's right here. The piece expresses great disappointment that markets have not plummeted in response to the budget deadlock telling readers:

"Despite daily warnings about the effects of the fiscal cliff — tax increases and budget cuts that could cripple the economy — the markets seem supremely convinced that all will be fixed before the Dec. 31 deadline."

Of course it is bizarre that the article would connect the "Dec. 31 deadline" with the markets' calm since in fact almost nothing happens if this deadline is missed. The economic consequences of waiting until the first weeks in January to get a deal are virtually zero. The markets likely know this, even if no one has told the folks at USA Today.

Comments (1)Add Comment
retired emergency manager
written by mike gramig, December 10, 2012 11:37
Dean, you and the many Keynesian believers are public treasures. Keep up the truth telling.

I do have one reservation to this post. When you say that there is little economic impact from going beyond the December 31 deadline for averting the austerity bomb, I worry quite a lot about the millions of unemployed that lose their unemployment benefits as the sequestration kicks in. And they aren't the only ones...

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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.