Is this the week that financial markets lose their sangfroid and sink?
Posted on 16 January 2012 with 4 comments from readers
Perhaps volumes in global financial market will step up this week with the eurozone back on the brink of armageddon again. The problem is that rather like the little boy who cried fire. Nobody is going to believe this until something bad actually happens.
France has lost its triple-A and has been downgraded by S&P along with eight other eurozone nations. The Greek private debt talks have ‘catastrophically’ broken down in the words of officials.
Greeks bearing gifts
Will the Greeks default? Or are they engaged in some kind of wretchedly ruthless last minute manouvre to steal yet a few more billion euros? Is the eurozone banking system now fatally wounded below the waterline like the Costa Concordia that sunk at the weekend? Watch for the rats starting to jump or the captain leaving the ship.
Monday’s overnight news from Asia showed some heavy selling though hardly a mass panic in the East. US futures weakened and gold and silver gained while agricultural commodities sold off.
Perhaps the ECB has been too active recently for anybody to worry to much. We know where the rocks are hidden in these waters and have highly sophisticated guidance systems. We are still well out of danger. This ship will never sink. It cannot happen.
You might still feel that way when you are having dinner at 8pm at night and you suddenly hear a crashing sound. Do be skeptical when you hear an announcement that this is an electrical failure or notice the captain leaving his table and heading towards a lifeboat.
Warning signal
It is a fair point. How much warning will the investors traveling in steerage get as the global financial markets run on to the rocks? The professionals may already not be on board. Certainly hedge fund managers and professional traders have not joined in the New Year party on Wall Street.
They waved goodbye at the start of the year as the ship headed off for its fatal voyage into the unknown. Only the manic day traders and junior cheerleaders took their place. Buying shares ahead of a global recession is just plain foolish. Still the politicians remain confident if careful to hedge their comments with caution.
You have to wonder at the culpability of people who believe what politicans tell them, or imagine that politicians are actually in control of events. Fear not, we cannot sink!
4 Comments posted by readers:
in france, where i (still) live, only very few people around me become cautious with their money: there is so much propaganda or disinformation that people don’t care, and don’t believe it really will be worse. astonishing…and then, it will be too late for them.
there are also some of them who begin to realize, but don’t want to see the truth, because they don’t wish it become true.
but never forget that french people is either like sheep, or explosive: there has been three revolutions already and if it become worse, i have NO DOUBT it will be explosive in my country, perhaps much more than in greece. Social protection in france is the obligatory insurance for political stability.
great letter yves..i will take one obviously legitimate report (yves, your english is excellent @ 90%..much better than my french!!) from ON THE GROUND than 1,000 from ALL the ivory towers..reading A$ with its small but good crew of commentators, i now know conclusively that france is as blind as america..i know too, they will blow up when awakened..britain and american political & financial scoundrels need to get to church EVERY WEEK nowadays..their safety is not assured, any more than the ship had an electrical problem
ben just might front-run the EU blowup january 26-27 at the meeting.
or save his bazooka(ha!) for the coming bank freeze up.
buckle up…..the eu mexican standoff is about to end as someone flinches.
its just a question of how bad it gets is all.
‘Social protection is ….stability’ is one marker of a well directed society; not one observed in many other developed economies.
This article is refreshingly realistic.