In July we penned an article titled “Market Correction on the Horizon? Use Caution Going Forward”. The major fear at the time was whether the US would raise the debt ceiling or risk, however remote, a possible default. The concerns in Europe were the situation in Greece, i.e. will they default. The underlying, and more damaging fear was how a default would affect Portugal, Ireland, Italy, Spain or worse, the unintended consequences yet unknown?
Fast forward to the present. The US raised the debt ceiling avoiding a deeper market selloff but unemployment remains persistently high with zero job growth in August. The job plan announced by president Obama did little to lift confidence concerning the economy. The US debt remains a drag on the economy with hopes that the super committee will pull a rabbit out of the hat. The Federal Housing Administration is suing banks seeking billions of dollars claiming they overlooked evidence of fraud at a time when banks are reorganizing, adjusting to increased regulation, or downsizing. The NLRB has sued Boeing for opening a $750 million plant in South Carolina basically demanding additional jobs should go to the state of Washington. The bottom line is there is still plenty of economic uncertainty for both US consumers and businesses alike.
The cost of insuring European sovereign and bank debt rose to records as a default by Greece moves closer to reality amid a worsening European debt crisis……
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