How China’s economic good news became stock market’s bad news

The first sign that something was brewing showed its ugly head on Wednesday, when stock market in the USA and Canada dropped.
Today, Thursday January 21, 2010, the drop continues. It’s definitely nerves racking and I decided to take a break from stock market and not take another glimpse on my securities.

Stocks dropped Wednesday, January 20, 2010, after China said it would curb bank lending to slow its economy.
On Thursday the country reported 10.7 percent economic expansion in the fourth quarter and 8.7 percent for all of last year. The numbers reinforced concerns that China will take more steps to tighten monetary policy and rein in its economy, which could hamper a global economic rebound.

If China puts brakes on its economy, the need for commodities will decrease and then we open the Pandora’s box again.

The second unpleasant event happened today, when President Obama Obama said he would seek to limit the size and complexity of large financial companies so that a bank’s collapse wouldn’t endanger the overall financial system.
Consequently, The Chicago Board Options Exchange’s Volatility Index jumped 17 percent. A rise in the VIX, which is known as the market’s fear index, signals that investors expect bigger swings in stocks.

Commodities – USD
Contract Last Change % Change
Crude Oil 77.00 -0.74 -0.95%
Natural Gas 5.56 +0.09 +1.61%
Coal 53.07 -0.93 -1.72%
Gold 1,103.20 -9.40 -0.84%
Silver 17.51 -0.37 -2.07%
Copper 3.30 -0.06 -1.79%

Data from: 2:27 PM ET, January 21, 2010
Note: Hard to understand why the Natural Gas is up, unless it’s pure market manipulation. There is no reason to be up.

The whole ‘economic recovery’ was a big fat lie, most people knew that. Some financial analysts predicted the double dip recession, with the second dip happening in the very near future.
The U.S. reported an increase in unemployment claims, and this is particularly hard because it means that new recipients showed up, while old recipients ran out of time and exhausted the much needed help, and probably right now are out of jobs and out of unemployment benefits.

In a nutshell: we are in big trouble. If the financial stimulus is going to be withdrawn, the bank regulations tightening will only make the matters worse.
With no financial help, there is no way to get out of this deep shit.

Maybe instead of giving again billion of dollars in bonus to bankers, the same bankers that caused the economic collapse and the same guys who benefited the most from being bailed out by the government, maybe the money should be given to the people suffering the most because of what happened due to the bankers’ greed.

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