World stock markets all dropped as much as 3% today including in the US but not Japan. The Greek tragedy is one reason, ironically because they have been bailed out and will not default. The problem is the onerous if not draconian austerity imposed on Greece by the invisible hand of the IMF. These destroyers of people’s lives across the planet are moving to put the Greek middle class in permanent serfdom.
This in itself is not moving the markets but the realization that the neo-cons will move to the next weakest economy either Portugal or the much larger Spain and create similar destruction there. By selling naked shorts on government bonds they will destroy their ability to borrow and force them to seek a bailout and accept similar terms. The reduction of buying power will deepen the recession and spread the contagion further.
Asian markets were down sharply but not so much from the loss of markets in the PIGS countries but from China’s restriction of bank lending. This is expected to lead into China allowing its currency to weaken and this is good news for Japan so its market was up. The moves that China makes do heavily impact the DOW 30 as 60% of their business is foreign derived. Commodities including oil fell on the prospect of a widening decline in business activity.
Main street should benefit from China restricting exports to the US but our economy is already hollowed out so it will take more than a 20% currency adjustment to have much effect. China did an adjustment this size a couple of years ago but reversed the policy after the banking crisis.
In AZ the unindicted crony of Jack Abramoff, Republican Senate candidate JD Hayworth has declared that a “buy-cott” from conservatives will offset anything those damn liberals can do. Will this consist of conservatives traveling to AZ to buy sheets made in China or will they just patronize service businesses that depend on cheap immigrant labor?
Hayworth is really going for broke as he will be completely dependent on voter suppression to get elected. Well not quite, the new Governor Frau Brewer used to be Sec of State where she not only suppressed 100,000 brown votes by arbitrarily cancelling their voter registrations but has kept in place the “no humans required” touch screen voting machines to provide the “right” vote count. Brown people are welcome to stay in AZ as long as they work cheap and don’t vote. Predatory capitalism and democracy don’t mix, sort of like crude oil and the salt water marsh. www.prairie2.com