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Economic Review

5/3/2010

With issues such as bailouts for Greece to save the EURO, allegations and investigations of Goldman Sachs….can it actually be an environmental issue that takes the biggest toll on US markets?

Last week, the US financial markets were in a state of chaotic turbulence as the major Equity Indexes posted significant declines early on, rebounded by mid-week but closed Friday out with another major setback.  The main culprit behind the eventual hammering of Stocks most likely rested on continued pressure on Goldman Sachs and a potential spillover to other Wall Street players by the SEC.   This was followed by European leaders’ indecisive handling of a Greek bailout.  However one issue that, for some reason didn’t get much play by the media, that may add to the negatives for the market, is the catastrophic oil spill in the Gulf which is still spewing oil into the sea.

The direct negatives come from the environmental and economic impact that the massive oil spill will cause (e.g. fishing, clean up, peripheral damage, cost to BP, future increased costs to the oil industry due to new standards for drilling, etc.).  However another result of this is the fallout on future off-shore drilling for oil, where the likelihood of any new drilling is most likely zero for the foreseeable future.

As the media begins to cover this story more and more, the public’s attention to this catastrophe will intensify (as visuals of the damage evolve), especially in light of the incredible profits earned by large oil conglomerates.  Will it rock the market more than any substantial new negatives on Goldman and other Wall Street players?....No, but given the recent broad based problems for Stocks, the markets don’t need any more issues to deal with.

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