Is the US financial sector in meltdown?
The ongoing rumours about the imminent nationalisation of Citigroup and Bank of America have caused serious concern in the US stock market. This concern has transferred over to the UK where investors have been selling property, mining stocks and banks over the last few days. It would appear that the US government is on the verge of nationalising Citigroup and Bank of America which will have a major impact on the US financial sector.
Despite the headlines regarding a multi-billion-dollar bailout in the US, courtesy of Barack Obama, it appears as though the US economy is still in a deep decline. Recent inflation figures suggest that the US may well be moving towards a deflationary period which could spell disaster for the US government and the US population. Stagnant prices are bad enough but when prices start to turn downwards this will have an immediate impact on unemployment figures, investment and consumer income which will then result in a vicious circle.
So far Barack Obama has had something of a honeymoon period, even though the US economy is under severe pressure. The next few weeks and months could well test the patience of the US population and their love for their new president.
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