Friday, 11 July 2008

More Economic News

There were two conflicting pieces of economic news today. The huge US conglomerate, GE, announced results that beat expectations. Its global revenues increased by 24%, its order rose by 8%. On the other hand, showing the divergence between the financial world and the real economy, the two huge US government sponsored enterprises GSE's), Fannie May and Freddie Mac, which are the largest providers of mortgages in the US, saw their share prices almost halve again at the opening of trade, having already collapsed in value in recent days and weeks. It now looks likely that the US government is likely to have to effectively nationalise them. On US CNBC, this afternoon, some financial analysts were proposing that the state simply give around $50 billion to the companies to recapitalise them, but without actually taking them into ownership, or exercising any control over that investment. Even in the US that is unlikely.

CNBC contributor, Jim Cramer, who became better known earlier this year as a result of featuring on YouTube giving one of his characteristic rants, said, "Look I'm a Libertarian, I think the State should keep out of everything, but this is like fiddling while Rome burns, what do people think this is the 1840's, and we have to sit around while millions of Irish people starve in the famine because we support a policy of laissez-faire?"

No comments: