SAN DIEGO (CNS) - A University of San Diego business professor said Monday that the stock market dive is a result of the failure of the nation's political leaders to act cohesively when solving the debt ceiling issue in recent weeks.
Alan Gin, known for his monthly San Diego Index of Leading Economic Indicators, told City News Service that today's drop of nearly 635 points by the Dow Jones Industrials was prompted by Friday night's lowering of the U.S. credit rating by Standard & Poor's, which cited concern over the "political discourse" and "intransigence" in Washington, D.C.
S&P lowered the long-term sovereign rating on U.S. debt from AAA to a still-strong AA+, but it had a huge impact on investors.
The firm said the way the debt ceiling negotiations went led to doubts that future progress could be made in corralling public spending or raising revenues.
Gin said "ideological rigidity" in the federal government made him "pessimistic," as well.
"The ideal solution is if politicians take this as a wake-up call and moderate some of their positions," Gin said. "The market is really concerned about the economy and the debt situation."
The giant drop in the stock market follows a 513-point fall last Thursday. The market is 2,000 points below its high point of 12,810 on April 29. The value of another major index, the S&P 500, has decreased 18 percent from its 52-week high.
Kelly Cunningham, of the National University System Institute for Policy Research, said investors were also reacting to poor economic news, including an employment report Friday that he called "pathetic." He said the slight increase in the number of jobs was "spun" because far more positions need to be created to make a dent in unemployment.
Cunningham, interviewed Friday by City News Service, said odds of the U.S. economy falling back into a recession are "very high," and he questioned if the last one ever really ended.
Spending by government, not business, raised the Gross Domestic Product, creating "a phony recovery," he said.
In the wake of the Gate Fire, which ignited May 20, the Bureau of Land Management has issued new restrictions for Southern California counties, including San Diego.
Veterans are being honored across San Diego County during Memorial Day weekend and dozens of Boy Scouts and Girl Scouts were among those spending their Saturday placing American flags at burial sites at the Fort Rosecrans National Cemetery.
With thousands of San Diegans expected to celebrate the holiday weekend at the beach, lifeguards are on high alert and a have a few warnings for those headed to the water.
U.S. Sen. Kamala Harris, D-California, is scheduled to visit local Navy personnel in San Diego and Coronado next week, her office announced Saturday.
A 30-year-old Vista man was arrested for drunk driving and failure to yield Saturday morning after leading Carlsbad police on a high-speed pursuit that ended with the suspect crashing into a pole, according to authorities.
A man, possibly armed, and holed up inside a home in the Bay Park community for about four hours Saturday surrendered to police without incident.
Vacationing homeowners were hit by thieves in Mira Mesa, but thanks to a smartphone app, the crooks did not get away with it.
Signs warning people to stay out of the water are once again posted in Imperial Beach after a new spill from Mexico dumped hundreds of thousands of gallons of sewage into the Tijuana River - polluting the South Bay.
Two defense contractors were sentenced to prison Friday for conspiring to steal more than $3 million worth of medical equipment from Camp Pendleton that the military had planned to ship overseas to treat injured Marines.