08/04/2011 04:01 pm ET | Updated Oct 04, 2011

What the Heck Is Going on With the Stock Market?

What the heck is going on with the stock market?!?

The DOWs down 2.5% (almost 300 pts) as we speak, though it's coming back a bit (I said a half-hour ago this was an overcorrection -- shoulda put in a call option!).

I get it -- kind of. The economy's lousy, the political system is too, the European debt crisis is dragging on if not deepening (I'm doing my part to help by eating a Greek yogurt as we speak), and the debt deal apparently hasn't pleased anyone.

But all of this was known, except for the latter--and the threat of default is behind us now, at least for awhile. Maybe investors are reading stuff like this (a proposal to make the "dollar of debt ceiling for a dollar of cuts" the new standard) and getting nervous that political dysfunction is now enshrined in the system.

Equity markets didn't like the jobless claims report, because, hey: who knew the job market was stalled??!

Sorry -- don't mean to get so dyspeptic. It's not unusual for the market to be manically depressive and psychotraumatically challenged at a time like this. But we really need some good news. And that may not happen until we get some good policy, a whole lot better than what's been coming out of this town of late.

Update: Um...did I say "call"...I meant "put"-DJIA falling again, down over 400 pts, 2:30.

DJIA, circa 12:45pm (Source: Bloomberg)

This post originally appeared at Jared Bernstein's On The Economy blog.