Investors have nowhere to hide

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Credit markets continue to freeze up, David Goldman writes in the Asia Times. “Before the present crisis, the U.S. government was running a deficit of more than $1 trillion, or over 4% of GDP, an extraordinarily high level at a time of full employment. The proposed stimulus measure will more than double the deficit, not including the nearly trillion dollars that the Federal Reserve is committed to spend to support the Treasury market, the interbank lending market, and – possibly – municipal and other bond markets.”

The market has set a limit as to how much money governments can spend to indemnify the world economy against a global freeze-up, he says. The U.S.’s proposed trillion-dollar stimulus program announced yesterday afternoon did not impress markets. “Investors think that governments are chasing after a market that has already started to roll downhill… For the first time since the U.S. Civil War, the credit of the United States is in play.”

Source: dailystockbuzz

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