Markets Say Bush Stimulus Plan is Weak

US stock markets are closed today for the observance of Martin Luther King, Jr.'s birthday. The rest of the world, though, has rendered its verdict on the Bush White House's plan to stimulate the American economy. From Australia to England, the markets have plummeted.

MSNBC reported, “Britain’s benchmark FTSE-100 slumped 5.5 percent to 5,578.20, France’s CAC-40 Index tumbled 6.8 percent to 4,744.15, and Germany’s blue-chip DAX 30 plunged 7.2 percent to 6,790.19. In Asia, India’s benchmark stock index tumbled 7.4 percent, while Hong Kong’s blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks. Canadian stocks fell as well, with the S&P/TSX composite index on the Toronto Stock Exchange down 4 percent in early afternoon trading. In Brazil, stocks plunged 6.9 percent on the main index of Sao Paulo’s Bovespa exchange. ”

Francis Lun, of Fulbright Securities in Hong Kong, told the nedia, “Today it’s because of disappointment that the U.S. stimulus [package] is too little, too late and investors feel it won’t help the economy recover.” David Cohen, Director of Asian Economic Forecasting at Action Economics in Singapore noted, “Maybe there’s still some wariness about politicians are able to come up with a compromise and act sufficiently quickly. I think the impact would be marginal anyway.”

It's a sign of just how badly the US has managed its economy that the markets won't rise on a presidential announcement that “help is on the way.” Fed boss Ben Bernanke has also promised aid, in the form of lower interest rates. That isn't doing any good either.

Hugues Rialan of Robeco France told the BBC, “It's becoming more and more difficult as the market is now in panic mode. We're falling back into the crisis of confidence in the financial sector. The banks have been reassuring the market over their exposure to US mortgage-related investments, but now we realise there is nothing reassuring about it.” Maybe Dr. King's birthday should be a holiday everywhere else too.

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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