An analysis on the huge drop in the stock market from the Wall Street Journal online 8/5/11-

The Global Rout
The Keynesians have fired all their ammo and here we are.

Excerpts:

If we had to single out one story in yesterday’s events as suggestive of the depth of the desperation it was Bank of New York Mellon’s announcement that it would start charging very large corporate and institutional depositors for the privilege of simply holding their cash. When even corporate treasurers are taking their money out of short-term securities and parking it in no-interest cash, you know the big boys are discovering the same anxieties Mom and Pop have known for a year as they ran out of safe havens for their assets.

From the first months of the Obama Presidency, billions of stimulus have been injected into the economy, budgeted federal spending has grown toward 25% of GDP and the Federal Reserve has poured oceans of cash into the markets.

The Keynesians have fired all their ammo, and here we are, going south. Maybe now President Obama should consider everything he’s done to revive the American economy—and do the opposite.

HKO comments-  Banks charging to hold cash and interest rates at zero.  Interest rates have gone negative.  Yet we are flooded with cash. Wow.  Nobody wants to invest and take any risk in this environment.  How hard is it to see the impact of the terrible legislation and onerous regulations this administration has wrought?

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