Investor Confidence Growth in Worldwide Economy

The Dow Jones Industrial Average has for the first time closed above the 17,000 mark as confidence from investors grows in the world wide economy. The stock index for the US which consists of the biggest companies in business increased by 92 points to close for the day at 17,068.

 

A report which stated that in June there were 288,000 jobs added by the US economy had a positive effect leading investors to push shares higher. Moreover, low interest rates have played their part in the up rise as that has led to investors pouring in money. Among other US indexes to have increased is S&P which saw new heights this year. The Dow recently closed at its 13th highest for the year while on the other hand the S&P 500 reached a 24th highest close in 2014.  

Slowly but surely

An increase in acquisitions and mergers as well as a string of other positive economic news has fired up investors and earned their confidence. All in all making Wall Street a much brighter place to be. The latest positive job figures to be released in the US was the icing on the week for global positivity along with China’s manufacturing productivity reaching a six month high.

Benedict Willis who works for Princeton Securities stated in an interview “the economic data we continue to get is not exceptional, but it is still positive” making his position on the New York Stock Exchange a touch more comfortable.

The worry which many investors had earlier in the year was that the rising stock prices would not be supported by actual growth in the economy. However, Mr Willis stated that so long as the economic figure continue to rise then that should be sufficient to support investor confidence and not raise any concerns. He further expressed his personal confidence in saying that he expected the stock markets to continue rising.

While on this subject, it is important to give credit to the Federal Reserve who have heavily influenced the pouring of money into stocks over the past year and a half by keeping interest rates at rock bottom. The Fed has made tremendous efforts to keep the rates at record lows and have succeeded in their mission which was to encourage banks to provide loans in order to stimulate the economy and with it to progress growth.

EUROZONE SLOWS TO A SNAIL’S PACE

The Eurozone economy has posted appalling growth figures for the months July to September with a growth of just 0.1% which is a decrease of 0.2% from the previous three months to that. This poor figures has marked only the second month which the Eurozone has posted a positive number, prior to which was an 18 month long recession which saw trade in the euro are contract month on month. The figure as well as showing further negativity, reveals the sensitivity of the recovery as well as the length of time it will take for the economic trade block to fully recover.

The European economy as a whole is taking a lot longer that expected to bounce back from the financial crisis in comparison to the other regions which suffered from the crash of 2008. With the Euro area having debt problems which bare similarities to those of the United Kingdom and the United States of America, for many of the Member States the debt level has a more political importance than its financial meaning.

Those less powerful members of the trade block have been bailed on unfavourable terms with conditions which lead to government cuts in spending with the overall objective to reduce the country’s debts. The implementation of such money saving policies have adversely affected voters who have been the victims of reduction in wages, an increase in taxes as well as job-cuts and changes to the provision of public services. The economic prospects for the Eurozone appear negative for the near future according to several economists who with high unemployment and a decrease in overall living standards cannot see now the economy can be driven to progression.

Nevertheless, a somewhat optimistic projection has been made for next year by the European Commission who predict at 1.1% growth and a progression of 1.7% in 2015. The US who are alike dealing with major government debt issues are however better at handling the economy with a growth rate for this year so far being 2.8% in comparison to the dismal 0.4% figure of the Eurozone.

No positives can be found either within Europe’s strongest and most influential countries, that of France and Germany. The growth of the German economy in the third quarter was down from 0.7% in the previous to 0.3% whereas France displayed a yet disappointing -0.1% which is identical to the third most important member state’s economy, that of Italy.

 

Europeans Fight Against Debt Crisis

Government officials throughout Europe are trying to find a way to reverse the debt crisis. They have imposed deep budget cuts for a couple of years now. These austerity measures have had serious implications for citizens throughout the continent. Citizens throughout Europe are speaking out against austerity and hope governments will focus on improving economic conditions for the lower and middleclass.

State of the Eurozone Economy

According to Joseph Stiglitz, an economics professor from Columbia University, most of the Eurozone is suffering a deep depression. Policy makers are reluctant to use that word, but the people of Europe know how bad conditions are. Economists believe that the austerity measures are only making matters worse. Stiglitz warns that Europe will need a decade to recover from the damage caused by these budget cuts.

Most economists agree that the Eurozone needs some structural changes. However, they said that policymakers are focusing too heavily on reforms within the individual countries. They said that they are going to need to focus on fixing the framework of the euro itself.

Citizens have thrown austerity strikes over the last year. They are calling for their leaders to stand up to the ECB and the European Commission leaders demanding austerity. Pier Luigi Bersani is pledging to stand by their request. He recently said that Italy must “leave the austerity cage.”

Nevertheless, politicians like Bersani don’t appear to have enough political clout to convince other lawmakers to reverse austerity measures. Austerity will probably remain a reality until enough people support Bersani and other lawmakers who share his views.

Will Austerity Work?

Some experts speculate that the citizens of Europe will refuse to tolerate austerity in the very near future. They may side with Bersani and other leaders who promise to stand up against the budget cuts. Politicians may feel pressured to give into their demands and increase spending.

However, austerity could fail even if leaders don’t back down on their budget cuts. Revenues may continue to shrink in the coming months, which would make it more difficult for individual states to meet their debt obligations.

Some experts have called for alternate solutions, but feel that the government doesn’t want to consider them. Stiglitz said that Germany won’t even consider any of the sound ideas that many economists have proposed. He said that Germany seems adamant about protecting the sanctity of the single currency, even though Europe is struggling to survive. Mario Draghi, the president of the European Central Bank, agrees with his sentiments. The Guardian recently quoted Draghi stating that the ECB will do whatever it takes to save the euro.