THURSDAY FEBRUARY 4, 2010

Blame the Greeks!

Good earnings report...check, good retail sales...check, strong market...not so fast!  While the economic numbers today were strong, the market took it on the chin with a 268 point drop in the Dow.  Why?

The good domestic news was overwhelmed by international developments.  Specifically, the market has become concerned, and rightfully so, with sovereign debt.  Over the last few weeks, the financial conditions of countries such as Greece, Italy, Spain and Portugal have worsened and are bringing into question the ability of these countries to service their debt.  The news out of Greece was disconcerting today and it set off market declines across the globe.  These declines caused a flight to quality and the U.S. dollar rallied strongly.  It seems that as difficult as the economy is here in the states, it is even worse in Europe.  At the moment, the U.S. appears to be the nicest house on a bad block! 

There may be a silver lining in this story.  Greece's debt crisis was caused by excessive government spending that was financed by debt.  Greece has one of the highest tax structures in Europe (and that's saying something!) and its economy has been struggling.  Sound familiar?  Hopefully , there are some lessons to be learned.  Is anyone in Washington paying attention? 

POSTED AT 1899-12-30 17:15:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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