Can Obama rally the markets?

As presidential history is made, Barack Obama now faces a global climate of financial uncertainty

What a speech.

Obama has been entrusted to deliver solutions to some of the biggest problems facing the American people and the world. None are greater than the financial crisis that deepens with the turn of each calendar week.

“Yes we can!” he stated at his election night victory rally in Chicago.

A cry of hope in our troubled times. But words of course are never enough, and the markets remain unconvinced.

The Dow Jones index fell for the second day on Thursday, falling to 301 points or 3.3 percent to 8837, while the FTSE 100 closed down 5.7 percent in London despite the huge 1.5 percent drop in interest rates.

If the President failed to rally the markets, the impact of tough new regulations emanating from Europe is cause for mild celebration.

EU finance ministers are taking steps to introduce a new system of financial regulation.

They approved a set of proposals on Tuesday in advance of a global summit on November 15.

Some believe robust controls and supervision at banks and other financial institutions is too late, but the French are not among them. They are leading the push for change claiming that too much deregulation since the mid 1980s, particularly in the UK and America, lay behind the problems global economies now find themselves in – an argument that few can challenge.

The principles were due to be discussed by all 27 EU heads of government, who will draft a negotiating position for Europe at a summit of the G20 in Washington on November 15.

Leaders’ attention is focused on global jobs and house prices.

In America, long-term unemployment claimants climbed to their highest level in 25 years to 3.84 million.

Property prices continue to fall on both sides of the Atlantic. In Britain, homes registered a value decline of 2.2 percent in October, according to the country's largest mortgage lender and leading housing researcher Halifax. The firm reported on Thursday a 15 percent annual fall in prices on last year - although the average earnings ratio, considered a key measure of affordability, fell below 5.0 for the first time in four-and-a-half years.

The 1.5 percent cut in the Bank of England lending rate is certain to boost confidence and the FTSE did rally at the news before closing down on the day.

The interest rate of 3 percent – the lowest level in the UK since 1954 - will be closely watched by other countries. It signifies a consensus among leading economists: inflation is no longer the greatest catalyst to recession. Deflation is the latest threat.

The 1.5 percent rate cut demonstrates how real this deflationary risk has become, and indicates that some of the shrewdest minds in business believe we have a long way to go before hitting rock bottom.

Non traditional contingency plans remain on the backburner, but will be called upon if required. They include of course the printing and distribution of new money from the central banks.

In the last three months Governments have been quick to pursue traditional policies in extraordinary ways to avert a crisis that most prefer not to contemplate, let alone articulate.

Words are inadequate at the best of times.