i would have expected the afterglow of a 700-800 point rally in the Dow over the last session and a half combined with brighter prospects for the US banking system after several harrowing days to last a bit longer than a few hours. Dealers are already looking at the costs associated with the bailout and fretting over the potential for a trillion dollar deficit this year. Good thing for the government that the fiscal year ends in October, otherwise, these guys might be right. I’m not a deficit lover but I’d rather take one big swallow of nasty medicine than be sick for years on end. The debate over the rescue package has barely begun, but I will stake out the optimistic side of the argument given the incredible resilience of the US economy, I’ll leave the deficits and doom discussion to others.
EUR/USD consolidates gains around 1.4410 while USD/JPY has stabilized after a dip below 107 via a peak just above 108.00
On the doom side, ECB economist Stark is on the wires helpfully pointing out that the financial crisis is not over yet.
