Dow closed down 175 points today, not surprising after all of the data and opinions coming from every corner of the globe. Governments are out of policy options at this point, so markets are on their own to clean up this mess if they can, as all of the adults have left the room. Or they have used up their bag of tricks. Either way, this is what they wanted, a total absence of any regulatory power or effective policy mandates, so this is what they get. The problem is, now they are in trouble and are whining for government leadership and structural change. This is lassez-faire economics in action, even if not intentionally, so we are in for the ride of our lives.
All economic trends and indicators that I have read today point to no bottom in sight for markets, continued slide into the double-dip as some are calling it, although in reality it is the Second Great Contraction. The first was the Great Depression of 1920s-1930s. Deflation is occurring here in the US and Europe, and others are in line with or behind us. Japan was actually experiencing it before we did. China is dealing wit their own but different macroeconomic problems. All markets are wondering which way to go and nobody has good answers.
Unpredictable is the operative word for this week and into the foreseeable future. Just do not get your hopes up for miraculous improvements in the economy anytime soon, meaning the next few years. The best thing that you can do is to get informed as quickly as possible and keep your ear to the ground on all things economic, political, and social. If you don't like the way things are going, you need to get informed and get involved. One sure way is to vote intelligently at every opportunity.
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