Last year, House Speaker John Boehner made moves to push the United States into default on its obligations. This kicked off a stock decline that ended in October and brought the President's favorability rating to a low at the same time. (See the intrade chart below.) That was a good dry run for the Republicans last year. Now is the time to do it again by talking about putting U.S. into default, driving down stocks, and driving down voter approval of the President. Clearly if you can drive down social mood by November, you have a good strategy to elect Romney. Simple plan among others in their arsenal.
The stock market, as a measure of mass psychology, needs a bounce this week or there is the possibility of repeating last year's stock decline into November and bringing Romney to the White House. The irony is that austerity championed by Republicans is the trigger for this decline. I recommend Krugman's latest book, "End This Depression Now."
The S&P 500 chart below shows last years decline into October and the recent rise to the recovery highs this Spring. Over on the right..Rut roh.