Jeremy Hobson: France and Spain are offering some hope this morning that yesterday’s coordinated action by central banks to ease credit is working. Both countries saw their borrowing costs fall in big bond sales. And of course, I don’t have to tell you that stocks skyrocketed on the central bank news — the Dow had its best day in almost three years.
For more, let’s bring in Marketplace’s New York bureau chief Heidi Moore, who is with us live. Good morning.
Heidi Moore: Good morning.
Hobson: So, Heidi, everything better now? Or is it possible that something might still be wrong with the global economy?
Moore: It’s possible that everything might still be wrong with the global economy. If you think about — what we have to fix is the big European sovereign problem — and it’s this big, falling apart building, all we’ve done in the past week is just put some spackle in one room. So we won’t know what’s going to happen to the European Union unitl January, and if the eurozone breaks up before then — or even after then — I mean, that’s still a possibility we’re thinking about and that’s very worrying.
Hobson: Was this, then, about buying some time for the Europeans, who always seem to be doing a little too little, too late when it comes to solving the debt crisis?
Moore: It’s very much about that. I talked to Guy LeBas at Janney Montgomery Scott, and I liked the way that he described the problem.
Guy LeBas: There’s been a slow-motion credit crunch in place for several months now. You need look no further than the performance of the European bank stocks to know that’s true.
So, we’ve seen this going on for a long time, and we will see it going on for a long time. And we also need to see more action. Mario Draghi, the president of the European Central Bank, admitted today that despite everything that the ECB has done, that they’ve seen very few results. And that’s very sobering.
Hobson: Sobering — although people’s stock portfolio’s probably look pretty good this morning. Marketplace’s New York bureau chief Heidi Moore, thanks Heidi.
Moore: Thank you.