Morning roundup: Facebook down 32%; Spain claims it won’t default

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Facebook down 32%

Catch a falling star, and get your fingers burned.

That’s apparently the lesson investors in the decade’s hottest IPO are learning, as Facebook’s stock drops 32% from its opening price. The down driver is concerns the website won’t be able to secure sufficient revenue from its mobile application to meet revenue expectations.

Can’t spell Spain without pain

Europe’s central bank is feeling rising pressure to rescue the region; and Spain, in turn, says it soon won’t be able to issue bonds without support from its neighbors. Despite raising those concerns, the country insists it isn’t looking for a bailout.

That’s good news for the Eurozone. Spain’s economy is larger than its other three weakest neighbors combined, and Greece has indicated a major cash infusion from its neighbors will be needed if it’s to avoid default.

The spate of bad news appears to be softening Germany’s position. It now says it’s open to some debt pooling, provided certain conditions are applied.

U.S. manufacturers, meanwhile, are hoping solutions applied this time lead to real recovery. Europe’s persistently slow economy is now hampering sales of American goods in the 17-country zone.

Europeans who do have cash on hand, meanwhile, are putting their money into real estate: specifically in London but also other places where their assets won’t be valued in Euros. This, despite the fact that the S&P plans to overhaul its property bond ratings and George Soros insists the Euro will survive.

Politics and the Fed

Presidential election years are touchy things.

Back in 1992 Alan Greenspan aggressively pushed down interest rates in an attempt to save his friend George H.W. Bush from the recession triggered by the Gulf War and decreases in military spending spurred by the fall of the Soviet Union.

It didn’t work, but the Fed was accused of meddling in presidential politics – and those same low-rate policies were embraced by Bill Clinton and created the roaring mid-90s economy that led to his landslide 1996 re-election.

This year, with unemployment and recession still dogging Obama, the Fed feels it’s on watch to keep cards that will improve the economy close to the vest.

To be sure, politics at its worst; but what can you expect from a country that kills the spending power of 50% of its own consumers by ensuring they’re not paid enough to properly stimulate the economy?

Enjoy your day, The Editors