Wednesday, November 30, 2011 – 02:00 p.m.
The Dow Jones Industrial Average climbed nearly 500 points on Wednesday on news the U.S. Federal Reserve will drop the rate foreign banks pay it to exchange the euro for the U.S. Dollar.
In other words, a promise to artificially print more money by doing nothing more than pushing buttons on a computer.
The move up, once again, brings stocks to the unchanged level for the year.
Wow! What a game changer.
The problem? The euro is in a death spiral.
Why you ask? Because member countries of the European Union can’t seem to stop borrowing and spending, and the most sound EU member, Germany, is the smartest of the bunch.
Germany has refused to spend their money bailing out other EU countries teetering on the brink.
Can anyone blame them?
Actually today’s announcement by the Fed is a sign of just how desperate the situation has become.
The goal today was to prevent any single country from defaulting. Even though Greece essentially has already done just that.
The EU wants to have its cake and eat it too! An untenable position to say the least.
With today’s move the Fed has now pretty much admitted that we are attached to the same cancer and now they are trying to contain the damage.
The reality is that all the phantom computer-generated money isn’t going to solve anything that balanced budgets can.
Expect the effects of this smoke and mirror move to be short-lived and stocks to give up recent gains and more.