The week of 10/10/11 was eventful in the global economy and capital markets, as has been the pattern recently. Monday witnessed a 330 point spike in the Dow amidst hope that the Euro Zone saga might finally be coming to a resolution in the near future. Germany and France indicated that they are willing to proceed in the bailout of Greece, yet no definitive word on their specific plans has been reported. Chinese officials have ventured to Greece to assess the severity of the situation themselves. Even though China does not own a significant amount of Greek debt on their books, they would still be very much affected by a downturn in the global economy because they are the predominant exporting nation in the world. With an economic slowdown, their exports would fall substantially, and their growth would slow much more rapidly. Amidst the hopes of a Greek bailout, the Euro strengthened as well against the dollar, and commodity prices have risen. Many analysts are dubious of the sustainability of this rally from a long-term perspective, however, mainly because of the continued lack of confidence and unsteady of demand in the global economy. Domestically, consumer demand has picked up, as September retail sales were higher than expected with a 1.1 % gain, quelling fears of a recession.
In further domestic news, Wall Street protestors are still proceeding full throttle, much to the chagrin of Mayor Michael Bloomberg; President Obama, however, has voiced his support of their efforts, noting that such people should be free to express themselves. The last thing our commander-in-chief should be doing is supporting civil disobedience and protest, which has a quite real possibility of becoming violent. In earnings news, Google shares surged, blowing past analysts’ expectations yet again. It seems Larry Page has been an excellent choice for Google since he took over as CEO six months ago and streamlined Google’s product focus, emphasizing Google+, their Chrome web surfer, and the Android smartphone line. In commodity developments, there has been talk of a possible return to the gold standard in the midst of countries hurriedly debasing their currencies to help their economies. A weak currency aids exports, as goods will ostensibly be cheaper for purchasing countries. Although this event seems unlikely, bullion prices could potentially increase 5 or 6-fold if the gold standard were in fact reinstated.
