Frankenstein's Monster

AITOOW loves the market's reaction to the first domino (the threat of a downgrade) in the debt ceiling crisis - yawn (not you Geitner and OBrahmin probably)? Told you! The market is (now more than ever) moved by manipulation by speculators playing with leveraged fractions of their own or rich peoples disposable income. They have (in concert with the Fed) created another artificial bubble in the equities market to help themselves (speculators) offset liabilities and provide the public with the illusion of economic improvement. We all know they didn't create jobs or lend. (As a unit) they are not going to upset this paradigm. It is too profitable and too easy. They will absorb/ignore all negative news. Any tailspin will only be caused by a few contrarians with enough force to cause enough leveraged positions to be unwound like last time. I'm not saying that the longs won't be squeezed. I'm not saying that we won't see a day or a week of panic. I'm not even saying that someone will not press the right pressure points and we see a repeat of 2007. I'm just saying that the a debt default in itself will not be the "real" cause. It will be the cover story for high stakes manipulation that is increasingly inevitable because of the behavior of our "longs" (increased risk and leverage with no cover). The administration's use of this "cover story" narrative only makes it more potent. So the message from the central government shouldn't be "default will ruin the economy". It should be "default (or any bad news) may be used by manipulators to cause an unwarranted collapse in stock prices". Put the blame on the speculators. Limit the potential impact to the market. Unless you really want the market to collapse so you can say I told you so. In either case I advise the other political party to run with that message if your opponents don't.