The World and the Financial Crisis II

Written by  //  December 19, 2008  //  Economy, Europe & EU, Infrastructure, Oil & gas  //  No comments

See also The World and the Financial Crisis

As it seems that the crisis is not going to go away any time soon and the page on this topic is getting far too long to handle, we are introducing a new page on the same topic.

Sterling nears parity with euro
(FT) The pound dropped to within 5p of parity with the euro as tensions broke out between the Treasury and the Bank of England over how to get banks lending again.
8 December
Falling Fortunes, Rising Hopes and the Price of Oil
(Stratfor) Oil prices have now dipped — albeit only briefly — below US$40 a barrel, a precipitous plunge from their highs of more than US$147 a barrel in July. Just as high oil prices reworked the international economic order, low oil prices are now doing the same. Such a sudden onset of low prices impacts the international system just as severely as recent record highs.
8 December

Bill Copp comment
Markets around the world were soaring as we slept here in North America and they were doing so on the back of a number of things, the most important of which was Friday’s strong New York performance in reaction to the worst job numbers report in 34 years. This letter has stated more than once, and most recently on December 5th, that a market that rises in the face of bad news has found a base upon which to build. The worse the news, the more important the contrarian rally will become. We have just witnessed such a successful test at 818 on the S&P 500 slightly above our suggested support level of 815.
Adding to this good reaction to bad news market scenario was some actual good news as Barack announced plans for an Eisenhower-like stimulus package just as Congress appeared to reach a bailout agreement for the auto industry. China too has joined the spending fray as it now seems that stimulus will quickly replace my favourite candidate, the short-lived prorogue, as word of the year.
Infrastructure spending will not be limited to America or China as Governments around the world realize that bridges, roads, schools, hospitals and the sewer and water systems that supply them cannot be imported; better still both the workers employed and the companies employing them will be paying taxes. Beats the hell out of a 500 dollar cheque to individuals who will drive to Walmart and boost the Asian economies and speaking of driving, think of how much of a tax cut the drop in gas prices is, about 400 billion I believe.

Buffeted by financial crisis, countries seek euro’s shelter
(IHT) The deepest financial crisis since the Great Depression has prompted countries that had snubbed the euro to take a fresh look at the virtues of the common European currency. After turmoil in the currency markets nearly destroyed the Icelandic krona and undermined the Polish zloty, those two countries are rethinking their opposition to adopting the euro. More surprising, Denmark – a nearly picture-perfect model of economic management – now looks more likely to embrace the euro, after rejecting it twice in the past.

 

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