The economic news from the US was universally appalling on Thursday, and to add to everything else, there is now growing evidence of another credit crunch in the European banking system.
Some of the weaker European banks in peripheral eurozone economies are again struggling to secure market funding, particularly dollar denominated funding, and are therefore once more being forced to throw themselves back on central bank lender of last resort support.
A banking crisis which transmogrified into an economic and sovereign debt crisis now shows every sign of transforming itself back into another banking crisis. There's a terrible circularity about it all which policymakers seem powerless to break. The outlook grows steadily grimmer.
Still, no matter. Stocks are cheap, right, and on the buy-on-the-dips philosophy, isn't now the time to be wading back in? Yes indeed. On most conventional yardsticks, including price earnings ratios, dividend yield and book value, shares do indeed look good value.
What is more, the corporate sector has in some respects never looked more financially robust. Costs have been cut and cash hoarded. On the face of it, there's enough balance sheet strength there for dividends to survive even the severest of economic winters.
The Telegraph
More:
http://www.telegraph.co.uk/finance/comment/jeremy-warner/8709692/Mind-the-gap-bonds-signal-a-depression.html
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