Will the Euro debt crisis see its climax this week? The head of the Eurogroup Jean Juncker thinks so…
From Marketwatch.com
The head of the Eurogroup, Jean-Claude Juncker, said the countries sharing the common currency, their rescue fund and the European Central Bank will soon act to save the euro, according to a pre-release of an interview to be published Monday by Sueddeutsche Zeitung.
"We will decide in the coming days which measures to take," Mr. Juncker is quoted as saying.
Mr. Juncker indicated the European Financial Stability Fund and the ECB will buy Spanish government debt to bring down yields after a summit of euro-zone leaders in late June had paved the way for sovereign-bond purchases by the bailout fund.
"I have no doubt that we will implement the decisions of the last summit," Mr. Juncker said, according to the newspaper.
His statements seem to be the first official confirmation of media reports that European leaders are drawing up a plan of purchases of Spanish and Italian government debt by the ECB and the rescue fund.
"The euro countries have reached a point at which we have to make clear with all available means that we are strongly determined to ensure the financial stability of the currency union," the German daily quotes him as saying.
"The world is talking about whether the euro zone will still exist in a few months," Mr. Juncker said, according to Sueddeutsche Zeitung.
Despite a gamut of bailouts, Euro’s debt crisis has lingered since 2008 and have been worsening,
The belief that a political solution will arrest the crisis, like in the recent past, will likely be just another delaying the day of reckoning, that would go against the central designs of the political masters—Messrs. Junker, Draghi, Hollande, Ms. Merkel and the rest, and this includes team Ben Bernanke of the US Federal Reserve, whom has been working closely with the ECB—to prop up the unsustainable political welfare-crony system.
But of course, real actions from central banks will have real effects in the marketplace and in the economy. And this is why the details of what they will do will greatly matter.
Global financial markets have priced in heavily the expectations of the coming massive bailout by the ECB.
So political actions will have to deal first with the market’s expectations. The failure of which may result to the magnified market tremors which could swiftly eviscerate gains we have seen in the recent days.
Next, financial markets have become extremely complacent and heavily dependent on steroids. Bad new has been interpreted as good news.
Growing signs of political desperation by Euro officials have only reinforced the market’s HOPE of a political fix from political narcotism (inflationism) even when unfolding events keeps us telling us the opposite.
Financial markets have been reduced to a branch of a grand casino according to ex-US President Reagan’s former budget director David Stockman
Not only will this mean sustained volatility of market pricing—out of the repeated price distortions from widespread interventions—such complacency amplifies the fat tail risks (or a market crash). Of course I hope that this won’t happen.But the risk environment or conditions says that this is a possibility.
But hope would not serve as a better guide for prudent investors, instead, we should prepare for the worst while hope for the best
Be very careful out there.
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