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Global Economy Bursting?

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Asian Stocks, Oil Slide; Gold, Franc Advance

http://www.bloomberg.com/news/2011-...s-on-rating-downgrade-n-z-index-declines.html

Asian stocks dropped, extending the worst global slump since the bull market began in 2009, while U.S. equity futures, 30-year Treasuries and oil slid after the loss of America’s top credit rating. Gold jumped to a record and the Swiss franc climbed to an all-time high against the dollar.

Group of Seven nations said they will take every action necessary to stabilize financial markets after S&P lowered the U.S. rating by one level to AA+, while the European Central Bank signaled it’s ready to start buying Italian and Spanish bonds to stem contagion. G-7 policy makers held emergency conference calls over the weekend as they sought to stave off a collapse in investor confidence that has already wiped out about $5.4 trillion in global equity values since July 26.
 
Trichet Draws ECB ‘Bazooka’ to Stem Contagion

http://www.bloomberg.com/news/2011-08-07/trichet-draws-ecb-bazooka-to-stem-contagion.html

European Central Bank President Jean- Claude Trichet signaled he’s ready to start buying Italian and Spanish bonds in his riskiest attempt yet to tame the sovereign debt crisis.

With governments failing to act swiftly enough to stop contagion, it has fallen to the ECB to battle a crisis that’s threatening the survival of the euro. Buying Italian and Spanish debt may require the ECB to massively expand its balance sheet and open it to accusations of bailing out profligate nations, breaching a key principle in the euro zone’s founding treaty. Germany’s Bundesbank opposes the move.

“It looks like the ECB has decided to bring out the bazooka,” said Douglas Borthwick, head of foreign-exchange trading at Stamford, Connecticut-based Faros Trading.
 
G-7 Seeks to Avert Collapse in World Confidence

http://www.bloomberg.com/news/2011-...y-measures-to-stabilze-economies-markets.html

G-7 finance ministers and central bank governors pledged in a statement to “take all necessary measures to support financial stability and growth.” Officials will inject liquidity and act against disorderly currency moves as needed, they said after a call late yesterday European time.

While the G-7 statement was “better than nothing,” it’s not likely to stem the dollar’s decline, said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. Muto added that the scope for coordinated policy action is limited by inflation pressures, caps on spending, and interest rates that are already near zero in nations such as the U.S. and Japan.
 
I can sum up all of the above news links in just a few words: "The global economy is in critical condition and has been put on life support. Call in the family, this does not look good."
The patient has a temp of 106d so he is packed in ice; his sugar level up off the chart so he is on med for that; his heart beat is too low so he has a pace maker; his blood chemistry is all screwed up so those are being supplimented; but other than that things look ok. This was all brought about by the attending doctor tinkering with the patients medications to tweek his energy level and the same doctor is in charge of getting this all sorted out.
 
Austin said:
I can sum up all of the above news links in just a few words: "The global economy is in critical condition and has been put on life support. Call in the family, this does not look good."
The patient has a temp of 106d so he is packed in ice; his sugar level up off the chart so he is on med for that; his heart beat is too low so he has a pace maker; his blood chemistry is all screwed up so those are being supplimented; but other than that things look ok. This was all brought about by the attending doctor tinkering with the patients medications to tweek his energy level and the same doctor is in charge of getting this all sorted out.
Click to expand...

Next shoe to drop is downgrade of G-7 debt, which totals more than U.S.
 
Moody's says U.S. needs to find more deficit cuts

http://www.reuters.com/article/2011...ings You Need To Know Before The Opening Bell

Ratings agency Moody's repeated a warning on Monday it could downgrade the United States before 2013 if the fiscal or economic outlook weakens significantly.

With U.S. markets still to open after rival Standard & Poor's stripped the United States of its AAA rating late on Friday, Moody's said in a statement its own decision to affirm the AAA rating on August 2 was on the condition that further cuts were found.
 
If we can hold above 1170, we might have a chance.
 
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