21 January 2008

World Markets Give Bush & Bernanke Bronx Cheer

Today, international markets voted on Bush and Bernanke's stimulus package. Apparently, they don't like it. Markets from Taiwan to Frankfurt dropped by 5% to nearly 8% - in a single day. This represents trillions of dollars in wealth that disappeared into the same place as yesterday's temperatures. This is sad news for investors who've already lost about 10% of their portfolios in just the first few weeks of this year - a reversal of all of last year's gain.

Why would investors across the globe be so unimpressed by the plan? Well, to put his stimulus plan in perspective, Bush is spending $100 billion a year in Iraq - a country whose economy is about $90 billion. He wants to pump about $150 billion into the US, where annual GDP is about $13 trillion. His annual "stimulus" in Iraq is more than 100%. To avert a recession, he wants a stimulus of about 1% for the US. If this sounds inadequate to you, don't feel alone. It failed to impress thousands of investors.

2 comments:

cce said...

The only folks in this household who have a portfolio are my kids and they took a big hit yesterday. Just a week ago I was asking My Better Half if we should sell off their stock and put the money under a mattress. He laughed at me. Hindsight is 20/20 but with Bush at the helm its easy to feel clairvoyant. His stupidity is crystal clear.

Ron Davison said...

cce,
Actually, at your age, it's best to look at this as a huge discount. Seriously. In 20 to 30 years, this will look like great discounts on already low prices.