The U.S. stock market had another good week, based in part on the announcement of another Greek bailout. The Dow flirted with 13,000 and American investors remain encouraged despite a mixed bag of economic news. And as usual, providing personal finance advice, real estate advice and consumer advice on the Ilyce Glink Show February 26, 2012 on WSB Radio.
The Dow touched 13,000 points this week before ending up 33 at 12,982. This is another post-financial crisis high for stock market investment. The latest run was impacted by President Obama’s proposal to cut the corporate tax rate from 35 to 28 percent amongst other confidence boosters. Dow champ Apple also announced this week that consumers should be prepared to be wowed by the last generation of Steve Jobs products in the pipeline. First time unemployment claims remained at a four-year low, another sign that the long-running unemployment slump may be abating.
But in large degree, the Dow’s performance was affected by reports of another Greek bailout, announced after a marathon meeting of Eurozone ministers. The $172 billion rescue package is the second in two years. Will it work this time? Here’s are the details of the plan:
- The agreement calls for private bondholders to write down Greek debt by 74 percent.
- More stark austerity measures will be implemented in an attempt to cut the nation’s debt to 120 percent of GDP by 2020.
While U.S. investors appear encouraged, the plan by no means guarantees recovery. The latest Greek bailout arrives just as predictions call for a six percent decline in Greece’s economy this quarter. And additional austerity measures will be placed on the backs of Greek citizens who are already suffering a serious and scary recession.
How long can the Dow remain insulated from Europe’s problems, especially when we have reasons for caution right here at home? Gas prices shot up 30 to 40 cents nationwide this week, and as for the housing market? Let’s just say that new construction numbers were awful. There has never been a sustained economic recovery that didn’t feature robust housing growth.
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