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STOCKS RALLY: UNDERLYING PROBLEMS REMAIN

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Stock markets around the world rocketed on Monday following a late Sunday announcement by European governments that they would take concerted action to support their national financial structures.

Confidence in sovereign governments to unconditionally prevent major financial institutions from failing boosted stock investors: the bellweather Dow Jones Industrial Average (DJIA), following leads in the Asia Pacific region and Eurozone, propelled itself sharply upward to an historic one-day gain of +936.42 points. The NASDAQ composite index and the S&P 500 followed suit.

The sharp reversal of volatility in world markets indicates underlying uncertainty about economic security on Main Street and remains a driving factor in stock investment today.

Whether markets are exuding inverse 'irrational exuberance' is yet to be determined. Outside the financial world of major national and global financial institutions, Main Streeters are still struggling with crushing consumer and mortgage debt as American incomes shrink to historic lows.

Fundamentally, the basic economic dynamics have not changed since Friday when US Treasury Secretary Henry M. Paulson, Jr. announced the US government intended to change the original terms of a $700 billion taxpayer funded bailout of major financial institutions. The Treasury, Paulson declared, had decided to use the money to nationalize US banks in an effort to jumpstart interbank lending and to free up frozen credit markets.

Indicators to watch for this week: quarterly 401(k) statements and the corporate health of major US manufacturers such as General Motors.

 

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Constance Lavender is an HIV-Positive pseudonymous freelance e-journalist from a little isle off the coast of Jersey; New Jersey, that is...

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President Bush and company have finally fixed all ... by R. A. Louis on Monday, Oct 13, 2008 at 8:41:26 PM
Good stuff R.A.Yes, everything is fine again. ... by Munich on Tuesday, Oct 14, 2008 at 1:03:03 AM
Good stuff R.A.Yes, everything is fine again. ... by Munich on Tuesday, Oct 14, 2008 at 1:55:38 AM