Two days of little movement for U.S. stocks is likely to end Tuesday, with renewed worries over euro zone debt pushing overseas markets lower, as well as U.S. stock index futures.
The Dow, the S&P 500 and the Nasdaq all registered single-digit moves both Friday and Monday, but this morning's worries likely mean a sharply lower opening, and those worries have also sent many investors to U.S. Treasuries. The 2-year yield hit a record low in overnight trading, while the benchmark 10-year note's yield hit a 14-month low.
Let's all remember that the president attended the G20 and demanded that everyone else continue to spend.
Yet, the entire rest of the G20 rejected this idea wholesale. The only person at this point that thinks that Obama should continue to borrow and spend, besides Obama, is Paul Krugman.
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
The rest of the world has realized that endless spending of money the government doesn't have is not only inefficient but leads to borrowing and/or taxation and both of those are contractionary. As such, the rest of the world gave Obamanomics a chance and now it's being rejected entirely.
