The Dow closed down for the ninth time in the last ten sessions, erasing all gains for 2011.
The stock market turmoil comes after all that debt ceiling nonsense in Washington in which each party tried to outdo the other in pushing austerity measures for the country.
The American public was told that if the austerity measures were not passed and signed into law, there would be economic hell to pay.
But even as the debt ceiling fight was going on in Washington, Europe was wrestling with its own debt and insolvency problems, economic data has been coming in on the decidedly weak side, unemployment remains at elevated levels, and GDP growth has been anemic.
Now all of a sudden its occurring to people that worrying about the debt ten years down the road might not be as important as worrying about GDP for the third quarter.
The Federal Reserve has been printing money 24/7 and handing it to the banksters at 0% to spur growth, but that doesn't seem to be helping the economy turn around - the banks are just sitting on all that cash instead.
All of this means that the economy is actually going to get a lot worse in the short term at the very least, as you cannot cut billions in spending at a time when neither consumers nor businesses are willing or able to pick up the slack and expect the economy to shake off the damage.
Somehow the clowns in Washington in both parties missed that lesson while they were outdoing themselves with the austerity measures.
Former Obama adviser Jared Bernstein acknowledged just that today:
“If this economy were a bicycle, it would be about to topple over,” said Jared Bernstein, a senior fellow at the Center for Budget and Policy Priorities and formerly the top economic advisor to Vice President Biden. “We need to put pressure on those pedals, but the political system is pushing us in the other direction. The economy is crying out for help and the political system is deaf to those cries.”
But even as all of this carnage is going on in the markets and on Main Street, the NY Times reports today that luxury retail sales are skyrocketing:
Nordstrom has a waiting list for a Chanel sequined tweed coat with a $9,010 price. Neiman Marcus has sold out in almost every size of Christian Louboutin “Bianca” platform pumps, at $775 a pair. Mercedes-Benz said it sold more cars last month in the United States than it had in any July in five years.
Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. Luxury goods stores, which fared much worse than other retailers in the recession, are more than recovering — they are zooming. Many high-end businesses are even able to mark up, rather than discount, items to attract customers who equate quality with price.
“If a designer shoe goes up from $800 to $860, who notices?” said Arnold Aronson, managing director of retail strategies at the consulting firm Kurt Salmon, and the former chairman and chief executive of Saks.
The rich do not spend quite as they did in the free-wheeling period before the recession, but they are closer to that level.
The luxury category has posted 10 consecutive months of sales increases compared with the year earlier, even as overall consumer spending on categories like furniture and electronics has been tepid, according to the research service MasterCard Advisors SpendingPulse. In July, the luxury segment had an 11.6 percent increase, the biggest monthly gain in more than a year.
The Times article says the increase in luxury sales is tied to the market, so I wouldn't expect there to be a whole lot of purchases at Nordstrom this evening after today's market bloodbath, but it sure is interesting how there is a waiting list for a Chanel sequined tweed coat with a $9,010 price tag even as the rest of the country is being force-fed austerity sandwiches and Obama peas, layoffs and furloughs, pension and salary cuts.
I guess Scott Fitzgerald was right about the rich being different than the rest of us - they have a lot more money and when the political class in Washington and elsewhere are shoving austerity measures and budget cuts onto the country, the rich are never asked to pay their share with something like, you know, taxes.
You can be sure that if the markets continue to tank, we will be sold even more austerity measures that will make the economy even worse and life for middle and working class people even harder as the elite continue to enjoy tax cuts and purchase those $9,010 coats at Nordstrom.
There seems to be two things you can count on as a certainty in the 21st Century United States - death and tax cuts for rich people.
To that, I would add austerity measures for the rest of us.