Posted By RichC on November 30, 2011
The financial markets woke up to a jolt this morning as several central banks including the U.S. Federal Reserve unified to shore up the global financial system. The debt crisis in Europe has continued to put downward stress on world markets and economies; the cheaper U.S. denominated loans available to European banks is expected to make them more liquid. According to Wednesday’s Fed statement, "The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity." (my read … “kick the can down the road” … but I’m hoping it works)
The financial markets opened strong this morning on the news seeing the Dow up over 400 points by mid morning. I suspect a significant portion of the jump may have been short covering, since the mood has been relatively sour as the U.S. economy doesn’t exhibit growth or many signs that confidence has returned. Optimistically though, even with our problems here in this country, we are much better off than entitlement burdened Europeans or countries believing nationally controlled industries can compete with the efficiently and innovation inspired by free markets and capitalism.