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Financial Planning > Behavioral Finance

The economy's spring thaw

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Nervous clients are comin’ round — finally. According to The Washington Post, the improvement in outlook and attitude reflects the combined impact of a wide range of actions, many of them taken with little public attention, according to government officials and private economists. But more important than any single program, the sources say, is a deepening confidence from financial markets that the government is prepared to take aggressive action.

Other reasons?

  • Since early this month, major banks have raised or said they would raise $56 billion in private capital.
  • The premium that banks charge to lend to one another, another sign of the system’s health, is at its lowest level since the financial crisis began in 2007.
  • The Standard & Poor’s 500-stock index is up 34 percent since March 9.
  • Stock market volatility this week hit its lowest level since the financial crisis deepened in September.

“The feeling is that for now we’ve avoided the Great Depression,” Anil Kashyap, an economist at the University of Chicago Booth School of Business, tells the paper. “But the real economy is still in pretty bad shape.”

Yeah, we know, and it might be a suckers rally. Caution is warranted, but for now, we’ll take it.


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