Back to reality for worldwide stock markets
After yesterday's announcement of a $1.1 trillion G20 funded rescue package it appears that investors may have had second thoughts today. Significant rises were reported across the major worldwide stock markets although there appears to have been significant "profit-taking" in the markets today. This situation has not been helped by disappointing non-farm payroll data from the US which has further highlighted the fragile nature of any short-term recovery in the worldwide economy.
The last few months have seen significant volatility on worldwide stock markets with investors looking for the "green shoots" of recovery. So far we have seen little or no signs of actual recovery but various rescue packages have at least given some hope for the future. However, as we have mentioned before, until the UK banking sector shows significant signs of recovery and liquidity in the market place improves, we are unlikely to see any prolonged recovery in the UK economy.
More than ever, the ongoing recession in the UK has highlighted the substantial strength and influence of the UK banking sector, something which the authorities will look to reduce in the future. Many people believe that this is a sector which has grown too large and too influential and left governments around the world little alternative but to use significant amounts of public funding to try and float the worldwide economy.
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