Image via WikipediaInvestors are fleeing the stock market in favor of bonds, which they perceive to be a safer investment. The announcement by the Federal Reserve that they have developed a new strategy to get the U.S. economy growing seems to be a major contributor to this run for safety.The Fed announced Wednesday that in hopes of reducing interest rates on long-term loans, it would shuffle $400 billion of its own holdings. In addition, the President of Strategic Energy & Economic Research, Michael Lynch, highlighted that this bleak outlook from the Fed combined with a rare public warning by the chief economist of the European Central Bank is a confirmation that the economy is not improving.
Investors appeared to take this as a sign that the economy was not about to recover anytime soon and that a recession may be closer now than at any point during the current recovery.
This caused oil and metal to dive sharply amid fears that demand for them would fall if the world does go into recession.
In spite of the lower interest rates investors spurned stocks in favor of bonds.
No doubt the polarization of U.S. politics also contributed to the stock market tumble, as it appears the Republicans are bent on bringing down President Obama even if this means a depression for the U.S.
On an unrelated matter, The Hoss sees some irony as during these turbulent times, we have millionaire NBA players and Billionaire owners unable to agree on a contract.There are many unemployed people willing to do any kind of work to feed their families, while these fat cats squabble over how to divide millions of dollars. The rich get richer and the poor, well they starve.
Stay on Track,Money Magazine Hoss
Next Hoss Cents Free Financial Money Magazine Post Sept. 2011
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