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Another Interesting Day on Wall Street
Written by on May 11, 2010, 01:15 AM
On Monday the U.S. stock market posted its biggest one-day gain in over a year as investors were buoyed by European strategies to confront the Greek debt crisis. The Dow Jones average gained 404 points, or nearly 4%, the biggest gain since March 2009. There were similar increases in the tech-heavy Nasdaq and the Standard & Poor’s 500-stock index. Analysts agreed that this weekend’s approval of a nearly $1 trillion aid package by the European Union and the International Monetary Fund was a significant factor in Wall Street’s optimism, calming fears about the stability of international markets. Read more analysis from the Wall Street Journal here.
Markets in Europe and Asia reflected significant gains as well, though the ripple effect of one nation’s economic woes continues to be a concern. In an interview with the New York Times one analyst said that long-term solvency issues haven’t been addressed and remain an unsteady component in the stability of the wider global economy. An economic strategist quoted in a separate N.Y. Times article said that the world “is living beyond its means and is now being called to account.”
That issue is at the core of a still struggling U.S. economy as the question of how much national debt is too much looms like a storm cloud over the nation’s recovery. Investors.com is the online outlet for Investor’s Business Daily, covering financial news. In a Monday article, Investor’s turned to Moody Investment Services for some context on the national debt, and found that the U.S. debt rating could be downgraded in 2018 if Congressional Budget Office projections remain true.
According to Investor’s, the key consideration is “the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18-20% of federal revenue is the outer limit of AAA-territory.” More dire predictions indicate that level could be hit even sooner, possibly even as early as 2013 if the percentage of debt service compared to federal revenue isn’t brought under control.
Another indication that the U.S. economy remains on shaky ground is news that the use of food stamps or the Supplemental Nutrition Assistance Program (SNAP) as it’s now known, is at its highest level ever, according to a report on Reuters. The most recent data from the U.S. Agriculture Department shows that 39.68 million people, or 1 in every 8 Americans, received federal assistance to buy food through the SNAP program. Those numbers are for February, 2010, an increase of 260,000 from January.
For some interesting background on the food stamp program: It first began in 1939 and lasted four years, reaching more than 20 million people overall – the highest number at one time was 4 million people – and at a cost of $262 million dollars. The program ended "since the conditions that brought the program into being--unmarketable food surpluses and widespread unemployment--no longer existed."
Eighteen years elapsed before the next version of the program when President Kennedy‘s first Executive Order mandated a food stamp pilot program – fulfilling a campaign promise made on the road in West Virginia. President Johnson made the program permanent by signing it into law in 1964 and it’s been in place since then, with various changes and expansions through the years. Click here for a short historical summary of the program on the website of the U.S. Department of Agriculture’s Food and Nutrition Service.
As these multiple and often disparate economic variables interact with each other, there are other events that could impact national markets and economies including the long-term effect of the British Petroleum oil spill in the Gulf of Mexico. Click here for the latest coverage from the New Orleans Times Picayune. More than 200,000 gallons of oil continue to flow each day into the waters off Louisiana, and authorities say the gusher may continue for weeks to come. That could play a role in the worldwide price of oil as U.S. policymakers consider the future of domestic drilling off the Atlantic and Pacific coasts as well as in the Arctic region.
How deep is America’s appetite for cheap oil and how willing is the country to understand and accept the present scientific and financial limitations of alternative energy technologies? In the end, it comes down to a risk equation. A free society must deal with the benefits and problems of progress and change, basing decisions on fact, not emotion. Public understanding of critical issues will heavily impact the future of how we deal with the challenges facing our world and be reflected in laws created by legislatures, city councils, and other bodies; in judicial decisions and litigation; and in how the private and nonprofit sectors and citizens attempt to address public concerns of risk to society.
To understand more about on the fundamentals of risk, click here to read a primer on AnalysisOnline.
Markets in Europe and Asia reflected significant gains as well, though the ripple effect of one nation’s economic woes continues to be a concern. In an interview with the New York Times one analyst said that long-term solvency issues haven’t been addressed and remain an unsteady component in the stability of the wider global economy. An economic strategist quoted in a separate N.Y. Times article said that the world “is living beyond its means and is now being called to account.”
That issue is at the core of a still struggling U.S. economy as the question of how much national debt is too much looms like a storm cloud over the nation’s recovery. Investors.com is the online outlet for Investor’s Business Daily, covering financial news. In a Monday article, Investor’s turned to Moody Investment Services for some context on the national debt, and found that the U.S. debt rating could be downgraded in 2018 if Congressional Budget Office projections remain true.
According to Investor’s, the key consideration is “the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18-20% of federal revenue is the outer limit of AAA-territory.” More dire predictions indicate that level could be hit even sooner, possibly even as early as 2013 if the percentage of debt service compared to federal revenue isn’t brought under control.
Another indication that the U.S. economy remains on shaky ground is news that the use of food stamps or the Supplemental Nutrition Assistance Program (SNAP) as it’s now known, is at its highest level ever, according to a report on Reuters. The most recent data from the U.S. Agriculture Department shows that 39.68 million people, or 1 in every 8 Americans, received federal assistance to buy food through the SNAP program. Those numbers are for February, 2010, an increase of 260,000 from January.
For some interesting background on the food stamp program: It first began in 1939 and lasted four years, reaching more than 20 million people overall – the highest number at one time was 4 million people – and at a cost of $262 million dollars. The program ended "since the conditions that brought the program into being--unmarketable food surpluses and widespread unemployment--no longer existed."
Eighteen years elapsed before the next version of the program when President Kennedy‘s first Executive Order mandated a food stamp pilot program – fulfilling a campaign promise made on the road in West Virginia. President Johnson made the program permanent by signing it into law in 1964 and it’s been in place since then, with various changes and expansions through the years. Click here for a short historical summary of the program on the website of the U.S. Department of Agriculture’s Food and Nutrition Service.
As these multiple and often disparate economic variables interact with each other, there are other events that could impact national markets and economies including the long-term effect of the British Petroleum oil spill in the Gulf of Mexico. Click here for the latest coverage from the New Orleans Times Picayune. More than 200,000 gallons of oil continue to flow each day into the waters off Louisiana, and authorities say the gusher may continue for weeks to come. That could play a role in the worldwide price of oil as U.S. policymakers consider the future of domestic drilling off the Atlantic and Pacific coasts as well as in the Arctic region.
How deep is America’s appetite for cheap oil and how willing is the country to understand and accept the present scientific and financial limitations of alternative energy technologies? In the end, it comes down to a risk equation. A free society must deal with the benefits and problems of progress and change, basing decisions on fact, not emotion. Public understanding of critical issues will heavily impact the future of how we deal with the challenges facing our world and be reflected in laws created by legislatures, city councils, and other bodies; in judicial decisions and litigation; and in how the private and nonprofit sectors and citizens attempt to address public concerns of risk to society.
To understand more about on the fundamentals of risk, click here to read a primer on AnalysisOnline.
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