The Scott Brown bounce continued today with the DOW up again as his swearing in established the new Republican majority in the Senate and heralded the return of economic prosperity… (oops) back to reality, 29 of 30 DOW components declined today, dragging the market down 2.5% and the broader markets dropped 3% as the economy continues to slip. The market has given up everything it has gained in the past three months and as the USD continues to strengthen, you can expect further declines.
China has frozen the issuance of new stock by companies and that signals that they are very serious about controlling their economy and avoiding bubbles. Greece may default on its debt and other southern European countries that embraced elements of Reaganomics are increasingly in trouble with Portugal and Spain close to default as well. Ireland is included in a group of countries that went in heavily for USD investments, known in Europe as the PIGS (Portugal, Ireland, Greece and Spain) are in deep trouble as the Euro plunges against the Dollar. Ironic since it is the US that is really in trouble but with the trillions that Wall Street banks were able to pump into world markets in the past year, it is the USD that is pulling it all down.
Meanwhile back in the USA, according to the job placement firm Challenger, Gray & Christmas, layoffs scheduled by major corporations have jumped 59% from December to January. The number is still much lower than a year ago but is moving in the wrong direction and picking up speed. Weekly unemployment claims are up again and there is wide spread apprehension about the monthly job report that comes out tomorrow.
There is word from the Obama Adm. that the report will also provide details about how the Bush Crime Family understated job losses in the lead up to the 08 election. It seems that there were a million more people unemployed than reported. Republicans continue brag about how many jobs they created during the Bush reign even though there had been a net loss of jobs even before this revelation.
The Fed has announced that it will stop buying home mortgages (it didn’t buy any last week) and the effect that will have on the economy can only be guessed at. If you guess higher interest rates, plunging home values and a collapsing real estate market you may well be right. It’s always darkest before the dawn, unless you go blind. www.prairie2.com