As the G-20 nations prepare for the upcoming meeting in Canada the financial news for this week has been disappointing.
On June 1, 2010 the US Treasury Department released the deficit figures for May; the United States national debt is close to $13 trillion dollars. Quite a staggering statistic, that equates to over $40,000 of debt for every man, woman and child in America. How long can America sustain this kind of debt?
On Friday, Hungary was the latest European Union nation to issue dire debt warnings. Hungary now joins a growing list of European countries in financial distress. Greece, Portugal, Italy, Ireland and Spain all have major debt problems.
Although the Euro is not the currency of Hungary, their debt warning sent the Euro into a tailspin. The Euro closed at a 4 year low of below $1.20.
The Dow Tanks
On Friday June 4, 2010 the Dow closed below the 10,000 mark at 9,931.97 down 323.31 points; this is a 3.15% loss of the market. The Dow has not closed this low since February and is down 10% from the April highs.
Wall Street took a dim view on the weak jobs report released on Friday. Overall there were 431,000 jobs created which was below expectations; the problems with the jobs numbers was the bulk of new hires (over 400,000) were temporary government Census positions. The Department of Labor reports 15 million Americans are unemployed but due to the temporary Census workers the unemployment rate is down slightly to 9.7%.
The widening of the European Union debt problem and the sinking of the Euro also had a significant impact on the markets.
To a lesser extent, the BP oil spill and the natural disaster it is creating in the Gulf is probably adding jitters to the market.
Global economic stability will be on the agenda for the G-20 summit later this month; let’s hope they can develop some constructive financial solutions.
There appears to be no end in sight to the rising US debt, European economic woes and market volatility.
Global economic deficits and wide market swings do not encourage private sector job creation.
Dow drops 324 points as euro sinks
By Alexandra Twin, senior writer June 4, 2010: 7:19 PM ET
Private employers hold back on hiring in May
Associated Press June 4, 2010
G-20 finance chiefs mull deficits, banking rules
Associated Press June 5, 2010
Elaine Kurtenbach, AP Business Writer, On Saturday June 5, 2010, 2:24 am