Last-Minute Euro-Crisis Update: Stock Market Ecstasy Has No Afterglow
I warned in an article posted here two days ago that the plan for the European Economic Crisis left a lot to be desired and that market enthusiasm for the plan, as it sent the market into convulsions, was as meaningless as … well, sex in a whorehouse. Such euphoria is just what happens there. It’s no measure of true love. What the market did when it climaxed ecstatically last week was no indicator of an economy now in recovery.
Euro-Crisis Back in the Forefront Already
Some might have thought my outlook in the face of such pervasive optimism was gloomy and WRONG, but CNBC reports today the exact problems I suggested are now being suspected by many:
“While larger banks have rushed to claim that they will not have to raise fresh capital [as a result of last week’s Greek Solution], there are fears that the region’s weaker banks, with higher exposure to sovereign debt from countries such as Greece and Italy, may struggle.
“They have averted a collapse this way, but they themselves don’t know what they have put in place…. There’s this idea that it will conduct some little bit of magic … and this will simply make Italy’s debt lower and Greece competitive. Yet nobody knows what the details are.”
The devil is in the details of the euro-crisis plan
China has already sounded off this morning in a way that indicates it will not go along with the Greek economic crisis deal after all, another possibility I alluded to. Since China’s presumed support was a big factor in the last week’s market orgy, today’s news of China’s shyness gave cause for the market to immediately fall out of bed. Market euphoria, so poorly based in the first place, began to give way to crying.
Likewise, CNN/Fortune Magazine reported online today that…
“The magic seems to be fading on Europe’s latest efforts to bring an end to its long-running sovereign debt crisis. The controversial deal reached last week initially sent markets soaring. But a lack of specifics in key areas of the deal seems to be sinking in, putting a real damper on the celebrations.
“…The markets took the weekend to digest the European’s latest controversial rescue plan to save the euro zone and by Monday, investors sent a signal to the Europeans that more is needed. Italian and Spanish bond prices rose, while equity markets around the continent fell, led by large percentage drops in bank stocks. Both are indicators that the market fears further contagion spreading to the big economies of the euro zone, which is exactly buy ambien online overnight cod what the plan was supposed to quell.”
Well, that didn’t take long! It never takes long for the magic to fade when the love isn’t real. The electrons were hardly dry on the article I just wrote about the Greek Crisis before the stock market’s eagerness began to wither. That optimism was all froth, and when the market rises because it is titillated by mere shadows of hope, you know the whole system is merely desperate for a good romp.
And now a side note on my own prediction that an economic crisis in Europe would bring a catastrophic market plunge in the U.S.
I wouldn’t call today’s drop a market crash due to the problems emerging from Europe, which I had predicted during the August crash this year; so I may have missed my mark in predicting a second plunge that would come in October that would be even worse than what happened in August. (The August one I had predicted about three months before and had given the timing as well, and it played out exactly as expected. Then, in August, I predicted a worse event in late September or October.) Today, Halloween, is the final day of the month in which that prediction could happen, and the second crash is looking a bit like a phantom right now — almost visible but not quite there. Unless today’s drop is the beginning of a deeper and longer fall, my prediction was off. One who is going to point out when his predictions were right (lest anyone miss noticing ;)) needs to be honest in pointing out when they are apparently off as well.
Today’s drop means I’m sitting right on the edge of this one. Will the EU crisis prove to be a rotting of the floor that gives way to a catastrophic market plunge in October? As this is the last day in which I could be right, tomorrow and the next few days will tell whether or not I was. It would take additional bad news tomorrow and in the days following to make the present drop the beginning of a trip over the cliff. Things are clearly hanging on the balance.
With our economy still resting on failed practices, every eurozone crisis is now a potential failure for the U.S. economy, too.
More reading on the euro zone crisis / euro crisis:
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Further reading on stock market gambling:
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