US Policy Uncertainty Back To Sept.11 And Lehman Collapse Levels

Tyler Durden's picture

The market may have found itself in the purgatory of the summer doldrums, where unlike last year this time, not only are volumes over 50% lower, but volatility is non-existent, but that doesn't mean that investors are sleeping easy. In fact, quite the opposite because as the following chart from MS confirms, the lack of market volatility merely mimics the complete chaos and lack of decisiveness in Congress, where each passing day brings America not only closer to the most contentious presidential election in ages, but to another debt ceiling hike debate, and, of course, the fiscal cliff. All of these combined have brought US policy uncertainty to the third all time highest level, on par with September 11 and the collapse of Lehman/TARP, and just short of last year's imminent European collapse, which was only staved off courtesy of the coordinated global central bank intervention on November 30.

As for Europe, fughedaboutit

MS' commentary:

In the US, the main uncertainty is about the upcoming elections in November and the related resolution (or non-resolution) of the fiscal cliff, the 5% of GDP automatic fiscal tightening that would result from current legislation. This has led our US team, which does not expect the issues to be resolved before the election and sees increasing evidence that the uncertainty is affecting corporate and consumer spending decisions, to downgrade its 2H12 growth forecast twice over the past two months. The renewed recent rise in uncertainty is illustrated in a new measure of policy uncertainty constructed by academics from Stanford University and Chicago University, which combines the intensity of press coverage of policy-related uncertainty, the extent of disagreement among professional forecasters on inflation and government spending, and the frequency of scheduled tax code expirations. The authors show a strong link between their uncertainty measure and economic outcomes.


In the euro area, the main uncertainty is over if and how the current debt crisis can be resolved and whether a break-up of the euro can be avoided. This form of uncertainty rose strongly during 2Q, following the LTRO-induced sugar-rush early in the year, and induced our European economists to slash their outlook for 2H12 and 2013 in late July, with the euro area entering a renewed recession as we write. Exhibit 4 shows the European Economic Policy Uncertainty Index from the same source as the US one, with a sharp rise in the middle of last year after the Greek PSI decisions and a renewed rise in recent months.

And as we said before, anyone hoping that the Fiscal cliff issue will be resolved cleanly, clinically and efficiently, is advised to invest in Las Vegas real estate alongside John Paulson because "housing has bottomed."

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GetZeeGold's picture



Hope and change......hell yes.


theMAXILOPEZpsycho's picture

Capitalism is clearly not working - we, as a species, need to move onto something more humaine. The idea that still persists amoung some here that people are not paid according to need (ie somone with a big family and many mouths to feed needs a greater salary) will soon be outdated and seen as medievil, on the same level as the gallows and the burning of witches.

I'm doing my best as a government regulator to get people to pay their fair share...

What are YOU doing?

GetZeeGold's picture



What are YOU doing?


Just watching.....should I be doing something else?


 I'm doing my best as a government regulator


What exactly are you regulating? They could use a hand over at the SEC and CFTC. If you see Jon Corzine.......grab him.


Caggge's picture

I'm doing my best as a government regulator


As a government regulator....just prosecute some fraud for once!! Maybe even enforce a law once in a while!

theMAXILOPEZpsycho's picture

You don't have to worry on that score - I come down like a bolt of thunder on small businesses not properly complying with regulation. Around the office, I'm even known as "the iron fist"

GetZeeGold's picture



Try to run a lemonade stand or have a bake sale......the gates of hell will unleash on your sorry ass.


How can taze a 10 year old girl? It's just don't lead them so much.


I'm so glad we have regulators that hate Capitalism..........thank you comrade!

cosmictrainwreck's picture

thanks a heap; too bad you don't have either the power, authority or balls to go after any of the REAL assholes that are burning USA to the ground

fonzannoon's picture

The iron fist? Thats what you are known as around the office? Are you being serious? Nah.

Freewheelin Franklin's picture

What's this guy? A "MillionDollarBonus" wannabe?

Freewheelin Franklin's picture

Paid according to "need"?

Define "need". Anything beyond the basic necessities of life is wants. If people were paid according to "need", everyone would be paid enough for a bowl of rice, a gray jumpsuit, and a corrugated tin shack. You commies don't want to lift poor people up, you want to drag everyone else down.


If you have too many mouths to feed, it's your own damned fault.

LawsofPhysics's picture

"Fascism is not working" -  FIXED.

Caggge's picture

If Congress can't make a decision before the budget increase, then take away their pensions. The problem will get solved in minutes when that is announced.

LawsofPhysics's picture

In other words, you expect these fucking bank puppets to indict themselves?

Good luck with that;  FYI, I think we fink ourselves here...

"The great questions of the day will…be settled …by iron and blood.”

Otto Von Bismarck, Sept. 30, 1862.

Itch's picture

Facebook execs can start unloading shares today, humm, wonder if they will???

GetZeeGold's picture least that's a ray of sunshine.


gdogus erectus's picture

As long as they don't mind committing the ultimate CLM.

ZeroSpread's picture

Thx for that post TD, was not aware of that indicator. Interesting one.

kridkrid's picture

I don't know... seems a bit like academic masterbation to me. It kind of feeds into the mythology that what we are watching is, in fact, real.

Bobbyrib's picture

Who gives a shit about the "Fiscal Cliff"? It brings us closer to balancing the budget and correct the problem of running even more massive deficits, while putting more money into Social Security, and maybe even winding down the military industrial complex. The only decision I was holding back on based on Congress' decision was whether to buy a house this year. I decided not to, so I no longer give a shit. Has the US economy had any positive organic growth since the last stock market crash? Does anyone else think ending the madness of bullshit stimulus will actually help the economy begin to adjust properly, rather than continue on the same path of malinvestment?

If the Republicans wanted to have the Fiscal Cliff issue handled by the election, they would not have asked a polarizing figure like Paul Ryan to be their VP candidate. Now as most of us know the two party system is a sham, but putting Ryan as the VP candidate then negotiating with him on the Fiscal Cliff will make the sham too clear. It would be viewed by the sheeple as a Ryan victory and the Democrats couldn't afford to give Ryan a victory on that front if they really wanted to win. Again, the whole election is a sham, but they have to do it for show.

Meesohaawnee's picture

henry blodgett on bubble vision. now were getting very laughable now. Im sure that will get the ratings up

Never One Roach's picture

"Sears has also paired with the Kardashian family on clothing and accessories, hoping to draw in younger customers."


That's the confirmation I needed that not only our economy stinks, but that our culture is in a fatal nosedive.

max2205's picture

What if , 2 years from now, a whistleblower announces that all Econ reports were massaged for the past 6 years.

Would you be shocked

Surrealist's picture

Tyler can you seriously believe this rot coming from the Reserve Bank of Australia???


European crisis end is near, says RBA


"THE euro zone financial crisis is likely to be resolved in the next few months, a senior Reserve Bank of Australia (RBA) economist has forecast.

RBA assistant governor (financial markets) Guy Debelle said that the next turning point for European leaders would the meeting of the European Central Bank (ECB) on September 6, where there was a high expectation of a breakthrough.

"This ability to put a bank aid on it and defer the problem for a few more months is coming to an end," Dr Debelle told Westpac's Deeper Insights Series Forum in Sydney on Thursday.

"I don't think you'll have this continual pattern we've had for the last two years where things get bad, they get close to the brink and then they do something to pull it back," he said.

"I think whatever the decision, probably over the next three to six months will be a decision that says we really are serious and this is here for the long term, or something falls apart."

Read more:
Xibalba's picture

At least we know Potter will rig the VIx under 10.  

virgilcaine's picture

A nice credit collapse springboard.

bigwavedave's picture

Vegas Real Estate seems cheap to me. And will most likely get cheaper. The point is who wants to live there?