Courtesy of John Nyaradi
The markets were unforgiving today, as the stock market plunged in what was a likely reaction to European woes (will they ever stop?), Barack and Ben’s speeches, and a still crippled economy.
All in all, policy makers around the world are quickly running out of time and money to stop another potential meltdown. Policy makers are in a box; yes, and the box is clearly getting smaller.
To start with Europe, the day started off not so well when European Central Bank’s top economist Juergen Stark stepped down, allegedly protesting the ECB’s bond-buying program. This is the second high-profile resignation from the Executive Board of the ECB; the first resignation was also in response to the bond buying program. To make matters worse, Greece does appear to be on the brink of default…and that should be no surprise to anyone. The EU’s box is really small and it keeps shrinking and it might explode soon.
To further add to the gloom and dispair, members of the G-7 are meeting today to discuss ways in which to re-kindle global economic growth; the general consensus seems to be that a meaningful solution is near impossible; member countries have expressed fears of debt and new currency wars as limits to a meaningful deal. The box does not seem to be big enough for the G-7 member countries.
On the home front, the Dow slid more than 300 points, and the US dollar was high compared to the now sick Euro dollar. Although US Treasuries jumped due to Greek fears, today marked the end of a very brutal week. Last night, President Obama outlined the details of his new $447 billion American Jobs Act, which consists of tax cuts, infrastructure spending, and continued unemployment benefits, among other measures. President Obama plans to present his new plan to Congress next week, and, as mentioned yesterday, Obama finds himself in an incredible shrinking box, as he faces a mountain of debt, a stubborn Congress, a possible double dip, and a sense of urgency to start campaigning for the White House in 2012.
In the age of bloated budgets, austerity measures, bailouts, quantitative easing, possible defaults, budget cuts, and a possible double dip recession across the world, one does wonder how and when this whole fiasco of a world economy will resolve itself.
One thing remains clear: policy makers are in a box, the box is not big enough, and the box is shrinking rapidly.
Stock Market Summary:
DJIA (DIA) -3.05; -2.70%
S&P 500 (SPY) -3.12 -3.62%
NASDAQ (QQQ) -1.21, -2.22%
Russell 2000 (IWM) -2.05; -2.95%
Have a wonderful evening and weekend, wherever you may be.
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