Obama created an unnecessary financial crisis. Not that we would have escaped eventually having one, but he played like a fool into the Republican desire to use the debt ceiling to push for budget cuts, and he tried outsmarting them to get his long standing desire of entitlements cuts through. Having the S&P downgrade hit when the Eurozone crisis was in an acute phase was like rolling a car full of explosives into a burning house. “Obama victory” may come to be the modern version of “Pyrrhic victory”.
And the man touted as a silver tongued orator can’t even talk up the markets. He actually managed to talk them down. Big time.
As numbed readers no doubt know, the S&P closed down 6.66%. BAC fell a stunning 20% on the day and its CDS spreads are up big. The VIX rose over 50% to 50. The FT Alphaville (hat tip reader Scott) point out that the VIX is backwardized. From their chat with Christopher Cole of Artemis Capital (boldface theirs):
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