Whatever happened to removing the shackles governments put on the free market? For the past year, it seems like one surefire way to get stocks to rally is for governments to start spending.
It looks like a Greek tragedy will be averted, as Germany said that it will would work with other financially sound members of the European Union to provide loan guarantees to Greece. This will ease concerns that many have about a potential default on Greece's sovereign debt. The Greek government's plans to reduce its deficit have provoked strikes as a protest against those measures.
The challenges that Greek finance minister George Papandreou face were highlighted by the strikes planned by workers in the health care, education, and transportation sectors. They will shut down hospitals, schools and airlines in order to protest the deficit reduction measures proposed by Papandreou.
However, if the measures are implemented, Fitch Ratings said they'll have an impact on the deficit spending of the Greek government. Nobel Prize winner Joseph Stiglitz said the deficit reduction plan would prevent a default and called on European Union governments to help Greece fight "speculative attacks against its debt. "I've been very impressed with the comprehensive approach" the Greek government is taking, he said.
"There's clearly no risk of default. I'm very confident about it."
But a bailout has risks. First, the citizens of countries like Germany and France, which are in sounder financial condition than some of their European Union members like Greece and Portugal, are likely to oppose a bailout. In addition, the issue of moral hazard, which the government of the United States faced with its bailout of AIG, Citi, General Motors, and Chrysler, will rear its ugly head. This can be countered, a senior economist at the European Policy Centre, "as long as it is very clear that any support only comes with very, very stringent conditions attached."
On the news, the markets rallied. The Dow climbed by 1.5 percent, breaking above the psychologically important 10,000 level to close at 10,059. The S&P 500 was up by 1.3 percent to 1,071. And the Nasdaq gained 1.2 percent, closing at 2,151.
Analysts said that the reaction of the markets showed just how critical what governments say is to investors. Even though it has been nearly two years since the financial system nearly imploded, "people are scared that the entire delicate reconstruction of the system...might be shattered," the chief investment officer from Alpine Woods Capital Investors said. "If the leaders are riding to the rescue then the market will feel renewed confidence."
So much for markets needing to be cut loose from the shackles of the government. Instead of that being the case, it seems like they're sucking on the government teat harder than any welfare queen ever did!
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It looks like a Greek tragedy will be averted, as Germany said that it will would work with other financially sound members of the European Union to provide loan guarantees to Greece. This will ease concerns that many have about a potential default on Greece's sovereign debt. The Greek government's plans to reduce its deficit have provoked strikes as a protest against those measures.
The challenges that Greek finance minister George Papandreou face were highlighted by the strikes planned by workers in the health care, education, and transportation sectors. They will shut down hospitals, schools and airlines in order to protest the deficit reduction measures proposed by Papandreou.
However, if the measures are implemented, Fitch Ratings said they'll have an impact on the deficit spending of the Greek government. Nobel Prize winner Joseph Stiglitz said the deficit reduction plan would prevent a default and called on European Union governments to help Greece fight "speculative attacks against its debt. "I've been very impressed with the comprehensive approach" the Greek government is taking, he said.
"There's clearly no risk of default. I'm very confident about it."
But a bailout has risks. First, the citizens of countries like Germany and France, which are in sounder financial condition than some of their European Union members like Greece and Portugal, are likely to oppose a bailout. In addition, the issue of moral hazard, which the government of the United States faced with its bailout of AIG, Citi, General Motors, and Chrysler, will rear its ugly head. This can be countered, a senior economist at the European Policy Centre, "as long as it is very clear that any support only comes with very, very stringent conditions attached."
On the news, the markets rallied. The Dow climbed by 1.5 percent, breaking above the psychologically important 10,000 level to close at 10,059. The S&P 500 was up by 1.3 percent to 1,071. And the Nasdaq gained 1.2 percent, closing at 2,151.
Analysts said that the reaction of the markets showed just how critical what governments say is to investors. Even though it has been nearly two years since the financial system nearly imploded, "people are scared that the entire delicate reconstruction of the system...might be shattered," the chief investment officer from Alpine Woods Capital Investors said. "If the leaders are riding to the rescue then the market will feel renewed confidence."
So much for markets needing to be cut loose from the shackles of the government. Instead of that being the case, it seems like they're sucking on the government teat harder than any welfare queen ever did!
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