BY JIM FLINK
 

Stocks soar after the world’s central banks take coordinated action to stem the world financial crisis.
The Financial Post has a summary.

“Central banks around the world … sprung into action Wednesday with a new plan aimed at staving off a global credit crisis threatened by Europe’s debt spiral... On the face of it, the goal of these surprise moves is primarily to reduce strain on financial markets, particularly those in Europe …”

The goal. Stop the free fall. Fuel a recovery. Almost immediately -- markets across the world -- shot up.
CNBC has the reaction.

“Big gains from Germany, up 4 percent.  The CAC went up three and a third, the Footsie also up three point give percent.  So just addressing those fundamental deep concerns about the bank funding.  The euro dollar spiked higher as you can see.”

Popular move?  Yes.
But why did central bankers across the globe act now?

The Guardian says -- all you have to do is look at this graph.
That previous dip -- was the collapse of 2008.
And central bankers saw some frightening similarities.

“The upshot is that banks have been charging each other more and more to turn their euros into dollars and that the rates have been reaching levels close to those when Lehman Brothers collapsed in September 2008. Hence central banks decided to act.”

And it was the fact -- central banks the world over -- all reacted together, that is giving a feeling of optimism.  An analyst on The Wall Street Journal notes....

“This is a coordinated effort.  And when you see the word coordinated, and you see five central banks around the world involved in this, the initial knee jerk reaction is wow, everyone is trying to solve the worlds problems.”

But not everyone believes this is a panacea.
A writer from the Wall Street Journal’s Real Time Economics notes, this may be more of a short-term fix.

“The move is more of a pressure-release valve than a direct action, and doesn’t do anything to address underlying problems in Europe. It reduces pressure on markets while policymakers search for a solution and signals that central banks are prepared to act in the event that conditions worsen.”

And a writer for Slate says, this kind of intervention is the same kind of ‘prop up the economy’ tactic, central bank haters -- well -- hate.

“... the conjunction of these kind of actions with continued inability to return us to full employment makes it all but inevitable that the "End The Fed" crowd's voices are going to grow louder. The world's central banks badly need to wake up and realize that it's time to go "all in" on doing everything the possibly can to solve the developed world's demand shortfall.”

Never fear, says an analyst on Bloomberg. We may have just witnessed the bottom of a prolonged world slump, because bankers are coming to their senses.

“Adults may be re-entering the room. We’ve been kind of without adults in leadership since 2008-09.  People have been looking particularly in Europe, for some intelligent things to happen.  They haven’t been occurring.  This may be the first step.”