Can Olympics Solve Britain's Debt Woes?
Candy Matheson | Jul 25, 2012 12:28PM ET
The 2012 Olympic Games open Friday in London and, according to some reports, are projected to cost British taxpayers more than nine billion pounds, with a hoped-for return of 13 billion pounds over four years (as suggested by Prime Minister David Cameron). That seems like a pretty big gamble as Britons struggle with recession, rising unemployment and severe public-spending cuts.
Data released today (Wednesday) shows that Britain's GDP dropped further into negative territory to levels seen in mid-2009, as shown on the graph below.
The Daily chart below of London's FTSE Index shows market action as of Tuesday's close at 5499.23. For now, major support lies at 5500 as market action from mid-2011 has been in a large trading range, defined by a triangle. In fact, the range extends back to 2009-2010 and is forming a large diamond pattern; potentially a topping pattern with a 1300 point range.
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A drop-and-hold below the diamond could send London's equity index tumbling -- possibly by 1300 points -- from 5500 down to the 4200 level, or lower. That'll be one to watch -- along with future GDP data releases -- along with whatever Libor fallout yet to come.
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