Italian Premier Silvio Berlusconi confirmed his nation would be moving toward a balanced-budget amendment on Friday, after rampant speculation that the European Central Bank would intervene in bond markets and purchase Italian and Spanish debt in exchange for structural reforms.
Speaking at a press conference, Berlusconi, flanked by his embattled Finance Minister Giulio Termonti, announced he had reached an agreement with European leaders to accelerate reforms. These measures, to be announced in Congress by Minister Tremonti, include speeding austerity plans by a year in order to balance the budget by 2013.
Also, according to Trade the News, Berlusconi announced Italy would be moving toward a balance budget amendment, much like the one many Republican policymakers argued for in the U.S. Berlusconi, who presumably has been in talks with France’s Nicolas Sarkozy and Germany’s Angela Merkel, also agreed to hold an early G7 Finance Minister’s conference, with heads of state possibly in attendance.
Speaking after his boss, Tremonti outlined part of the plan. Labor reform is critical, he explained, and austerity measures will be moved forward one year, so that the focus of the plan will be during 2012 and 2013 rather than from 2013 to 2014. Tremonti, who confirmed he had been in talks with Treasury Secretary Tim Geithner in recent days, noted they were just accelerating austerity, as opposed to bringing new plans to the table.
If it’s August it must be time for another chapter of the European crisis. But markets around the world, including in the U.S. these last two weeks, are forecasting something more sinister. The eight-day decline in the Dow Jones Industrial Average DJIA +0.54% — snapped Wednesday with a paltry almost 30-point gain — shows that investors are discounting a new recession next year.
The latest batch of economic reports are almost too weak to digest, though that didn’t stop MarketWatch’s Washington bureau chief from compiling them into a terrifying summer reading assignment on Wednesday. See chronicle of gloom.
If the payrolls and unemployment numbers on Friday are anywhere near as bad as they are expected to be, then stocks could get even worse next week. Economists predict July’s nonfarm payrolls grew by a meager 75,000, and that the unemployment rate stood pat at 9.2%.
Anything weaker than 75,000, or a worst-case scenario of a negative number, could spur a stampede out of equities.
Some pundits claim the market is poised to bounce in coming days as the length of the latest decline has made it oversold. That’s probably right. A downgrade of the U.S. debt rating by Standard & Poor’s, removing that uncertainty, could be the catalyst, as I’ve said before. And it’s still entirely possible that stocks will come out of this summer with big gains heading into the end of the year.
But the decline in stocks these last several days is a dramatic example of what happens when a market turns.
The last eight-day decline in stocks, which came in October 2008, just a few weeks after Lehman Brothers collapsed, was equally brutal. Stocks did bounce back, but then slid again — for another five months before hitting the bottom in early March 2009.
The economy is not as shell-shocked right now as it was then. It is on a pronounced downward slide, though, and no amount of Federal Reserve stimulus is going to counteract that, if indeed the Fed proceeds on a new spending program.
Speaking at a press conference, Berlusconi, flanked by his embattled Finance Minister Giulio Termonti, announced he had reached an agreement with European leaders to accelerate reforms. These measures, to be announced in Congress by Minister Tremonti, include speeding austerity plans by a year in order to balance the budget by 2013.
Also, according to Trade the News, Berlusconi announced Italy would be moving toward a balance budget amendment, much like the one many Republican policymakers argued for in the U.S. Berlusconi, who presumably has been in talks with France’s Nicolas Sarkozy and Germany’s Angela Merkel, also agreed to hold an early G7 Finance Minister’s conference, with heads of state possibly in attendance.
Speaking after his boss, Tremonti outlined part of the plan. Labor reform is critical, he explained, and austerity measures will be moved forward one year, so that the focus of the plan will be during 2012 and 2013 rather than from 2013 to 2014. Tremonti, who confirmed he had been in talks with Treasury Secretary Tim Geithner in recent days, noted they were just accelerating austerity, as opposed to bringing new plans to the table.
If it’s August it must be time for another chapter of the European crisis. But markets around the world, including in the U.S. these last two weeks, are forecasting something more sinister. The eight-day decline in the Dow Jones Industrial Average DJIA +0.54% — snapped Wednesday with a paltry almost 30-point gain — shows that investors are discounting a new recession next year.
The latest batch of economic reports are almost too weak to digest, though that didn’t stop MarketWatch’s Washington bureau chief from compiling them into a terrifying summer reading assignment on Wednesday. See chronicle of gloom.
If the payrolls and unemployment numbers on Friday are anywhere near as bad as they are expected to be, then stocks could get even worse next week. Economists predict July’s nonfarm payrolls grew by a meager 75,000, and that the unemployment rate stood pat at 9.2%.
Anything weaker than 75,000, or a worst-case scenario of a negative number, could spur a stampede out of equities.
Some pundits claim the market is poised to bounce in coming days as the length of the latest decline has made it oversold. That’s probably right. A downgrade of the U.S. debt rating by Standard & Poor’s, removing that uncertainty, could be the catalyst, as I’ve said before. And it’s still entirely possible that stocks will come out of this summer with big gains heading into the end of the year.
But the decline in stocks these last several days is a dramatic example of what happens when a market turns.
The last eight-day decline in stocks, which came in October 2008, just a few weeks after Lehman Brothers collapsed, was equally brutal. Stocks did bounce back, but then slid again — for another five months before hitting the bottom in early March 2009.
The economy is not as shell-shocked right now as it was then. It is on a pronounced downward slide, though, and no amount of Federal Reserve stimulus is going to counteract that, if indeed the Fed proceeds on a new spending program.
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