Panic? Not yet

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U.S. Federal Reserve Chairman Ben Bernanke gave a nod to stimulus measures Thursday, but that didn't appease many on Wall Street.

Speaking to the Joint Committee on the Economy on Capitol Hill, Bernanke said that further stimulus measures would give the flagging labor market a boost, but he stopped short of saying when or how.

Bernanke being wistful was not well received by investors. The Dow Jones industrial average held on to some gains made earlier in the day, but the Standard & Poor's and Nasdaq boards sagged into the red.

That put the DJIA ahead for three consecutive days -- unheard of these days. It had been more than a month since the index had posted even two consecutive days in positive territory.

Gold, specifically, is balanced on the Fed chairman's every wink. Gold traders have been betting on a new round of quantitative easing, which would devalue the dollar. This would make commodities priced in the dollar more affordable abroad. Without Bernanke's endorsement, however, gold gave up $41 Thursday and closed under $1,600 an ounce.

Bernanke, of course, has a very different job than that of a trader in precious metals, so it bears reminding that there is something else that Bernanke is not doing, on top of not jumping on the quantitative easing bandwagon, that is.

What Bernanke is not doing is panicking.

Switching attention across the pond it seems that panic is setting in, not by investors, but by policymakers who appear concerned that inaction will do more harm than good.

Sometimes that's true. But two years ago, most countries in Europe jumped on the fiscal discipline bandwagon and now, having ignored many well-intending economists, the United Nations declared in so many words Thursday that the austerity-minded strategy in Europe is "backfiring."

Just ask Greece. International bailouts combined with draconian spending cuts demanded from the powers that be have crippled the Greek economy to the point that it is expected to contract more than 6 percent this year. That's the kind of rescue a lot of countries would do well to avoid.

Loaning Greece money and demanding the government pull back on supporting its economy was and is akin to giving John Doe an expensive loan, but only if he agrees to first quit his job.

It made no sense then -- and still doesn't.

A growing chorus of organizations are now questioning this kill-the-patient first cure for economic ailments. Regardless, leaders in Britain, France, the United States and the European Central Bank all pledged this week to act "very rapidly," as French Finance Minister Pierre Moscovici said.

Likely, that would be a mistake. Leaders are supposed to convince investors that it is never time to panic -- even if they have to employ Ben Bernanke's poker face in order to do it.

In international markets Friday, the Nikkei 225 index in Japan dropped 2.09 percent and the Shanghai composite index in China shed 0.51 percent. The Hang Seng index in Hong Kong gave up 0.94 percent while the Sensex in India rose 0.42 percent.

The S&P/ASX 200 in Australia lost 1.09 percent.

In midday trading in Europe, the FTSE 100 index in Britain slid 0.69 percent while the DAX 30 in Germany lost 0.64 percent. The CAC 40 in France lost 0.88 percent and the Stoxx Europe 600 dropped 0.7 percent.