A number of economists and financial managers say Washington is making the volatility on Wall Street worse, when it should be acting as a calming influence.
Usually, Washington points the finger at Wall Street for some financial tomfoolery. But now some Wall Street commentators say Washington bears some responsibility for the wild markets over the past several weeks.
They argue the wild swings started right after Congress finished wrangling over extending the federal debt ceiling. Then, after Standard & Poor’s downgraded the credit rating for US debt because of the politics involved in reaching any future agreement, the markets got really extreme – dropping 623 points in one day. The result: many investors say Washington’s behavior had something to do with raising the level of angst.
“I talked to a lot of financial consultants and investors on a one-on-one basis and most feel the way it was played out was almost Machiavellian, and it created a lot of uncertainty and volatility that was not needed,” says Fred Dickson, chief investment strategist at D.A. Davidson in Lake Oswego, Ore. “There is a considerable amount of blame resulting from Washington’s misbehavior.”