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EU to Bail Out Greece


Global markets have experienced some resurgence so far this week, as evidence is mounting with regards to an EU bail out of Greece. This is of course great in the short term and terrible in the long term. It would seem that most "advanced" economies have completely given up the fight and have allowed themselves to drown in debt.

We have been riding this up-trend in global markets since early on in the "recovery", but we hold no illusions as to its lengevity. Rest assured, this recovery has no substance. You don't have to be an economist to see the folly in creating more debt in order to combat problems which arose out of an over-abundance of debt, much like you don't need to be a doctor to know that an intoxicated man won't become sober by ingesting more alcohol.

This subject has been visited and re-visited countless times by many contrarian analysts, so it will suffice to say here that as more and more organizations (by which I mean both large business as well as sovereign nations) line up at the trough, it is logical to conclude that eventually the trough will be empty, with no organization left that is both willing and able to hand out money. It is a vicious cycle, of which the paper-shuffling economies of the west will be the first victims.

In short, let the markets revel in their invincibility as they perceive it, being immune to down-side risk while enjoying all the upside. Ride the wave for as long as you can, but be prepared to also ride the tsunami when it comes the other way, because that's when the real excitement will begin.

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