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Markets rally! Have we finally turned a corner on global crisis?



STRASBOURG, FRANCE - NOVEMBER 24:  French President Nicolas Sarkozy (C) shake hands with German Chancellor Angela Merkel (L) and Italian Prime Minister Mario Monti (R) on November 24, 2011 in Strasbourg, France. The three are meeting to seek agreement on how to resolve the Eurozone debt crisis as both Monti and Sarkozy are under pressure to reassure financial markets over the future of their respective countries' economies.  (Photo by Thomas Niedermueller/Getty Images)
STRASBOURG, FRANCE - NOVEMBER 24: French President Nicolas Sarkozy (C) shake hands with German Chancellor Angela Merkel (L) and Italian Prime Minister Mario Monti (R) on November 24, 2011 in Strasbourg, France. The three are meeting to seek agreement on how to resolve the Eurozone debt crisis as both Monti and Sarkozy are under pressure to reassure financial markets over the future of their respective countries' economies. (Photo by Thomas Niedermueller/Getty Images)
Thomas Niedermueller/Getty Images

The markets are rallying big-time today, with the Dow alone up more than 400 points. So what's going on? Elizabeth Harrow at Shaeffer's Research sums it all up rather neatly:

[T]he good news seems to be pouring in from all corners of the globe: Euro-zone leaders finally agreed on ground rules regarding the expansion of the European Financial Stability Facility (EFSF); policymakers in Beijing lowered their reserve requirement ratio for banks; and the Federal Reserve coordinated with the European Central Bank (ECB), Bank of England, Bank of Japan, and other major central banks to lower the cost of emergency dollar loans. And, as if the bulls needed another catalyst, the day's slate of domestic data was surprisingly robust. Payroll giant ADP announced that the private sector added a stronger-than-forecast 206,000 jobs last month, while pending home sales and the Chicago PMI also improved beyond economists' expectations.

That might sound like a bunch of financial gobbledygook, but it's easy enough to translate:

None of this is really super-duper great news. In the European context, all it means is that the eurozone countries, with the outside aid of the central banking establishment, are finally committing to deal with the crisis and, from the looks of it, preserve the euro. The involvement of other central banks suggests that this isn't just a euro problem anymore, but a global one.

But hey, it could be too much, too late. The major challenge with the eurozone crisis has been that every time a new plan comes out, it's analyzed and found to be insufficiently large. This latest series of moves may change that perception — but then the markets may conclude that patient is already beyond saving and that no measure of action will be enough.

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