"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Monday, January 10, 2011

"It is an ancient ECB, And he stoppeth two of three."

The Dow was down 37.31, the NASDAQ was up 4.63, and the S&P 500 was down 1.75.  What happened?
Portugal.  Portugal happened.
Portugal is the current albatross around the neck of the marketplace.
The European Central Bank kicked off the decline in the European and American markets by purchasing E113 million worth of Portuguese sovereign debt.  European markets, already jittery about the prospect of a third nation being hurled off the cliffs by Disney nature documentary makers[1], reacted by diving downwards.  Despite recent Chinese assurance that they would continue to purchase PIIGS debt, nobody wants to be caught holding the bag on bonds from nations that will be consumed by rioting[2] as their economies continue to dwindle away to nothingness.
The G20, meanwhile, is calling for urgent action on the current food crisis.  And no, crisis is not too strong a word.  Food prices last month passed levels that caused international food riots in 2008, and there does not appear to be an end in sight.  Drought and wheat rust in Russia drove wheat futures up 47% in 2010, sugar and meat prices are at their highest levels in 20 years, US corn prices are up 50%, and US soybean prices are up 34%.  This is what is known as a bad thing.
There is no word, of course, about whether the G20 called for urgent action on the current food crisis during the thyme-roasted rack of lamb (with tomato, fennel and eggplant fondue) course, or if they waited for the pear torte with huckleberry sauce before expressing concern about food prices.
[1]  I.E., lemming-like.
[2]  I.E., forced to implement austerity measures.

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