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Entering a new chapter in the latest saga of the global economic crisis
After the announcement of the astronomic 1 trillion dollar U.S. bailout of Greece by the International Monetary Fund and European Union, the initial stock market euphoria has turned into caution and unsettled fear. Now Britain has their first coalition government in 70 years and will they be able to rein in their ballooning debt.
Governments have been living beyond their means and drastic cuts are needed now to avoided faults. The markets are asking, will it buy enough time for the Euro fiscal misfits to get their finances in order? Will they be able to pass enough belt tightening measures without massive riots and turmoil? Can the people in the effected countries ratchet down to beans on toast lifestyle after enjoying caviar and champagne? Is this just a temporary financial bailout that will come back to haunt the euro/global markets in two or three years? How much will these social and financial changes affect global energy demands? All these questions add more uncertainty and the investor’s are fearful. They are moving away from selected currencies and commodities and diving further into the safe glitter of gold. This week gold bullion reached a new record high o f $1243/once and is expected to continue rising due to market uncertainty. Crude continued its slide this week, and since May 3 has decreased by 12% to close on Wednesday at $75.65U.S./barrel. We expect there will be continued market volatility until more economic data confirms the recovery is really happening.
So what does the Euro bailout mean for Canada and the U.S.? And what will this week’s (EIA) U.S. government inventory report mean for Canada?
By: Roger McKnight, Senior Petroleum Advisor
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