Turkey Day

The events in the EU continue to be a disaster. There is no other way to describe it.  The good news is that we will be oversold at the end of the day on Monday. Even during these treacherous last few months oversold readings have led to rallies. Have a great weekend.


Brent Barber said...

From my readings this weekend, I think the German / ECB attitude is:
These countries (Italy, Greece, etc) survived with high interest rates before joining the Euro.  They've had the benefit of very low rates from being in the Euro and now it is time for them to make the hard changes that need to be made for them to be the type of country which deserves these low rates. 

Things are changing - Greece and Italy put in budget focused governments, Spain and France passing austerity budgets and, this weekend, even Belgium is finally doing something.

It's a bit of a game of chicken, but I think Merkel and friends may actually be pleased with the way things are playing out and I don't think there will be big ECB money printing.

Tsachy Mishal said...

I think they know they have to print but are trying to extract as much austerity as possible first. True, what you outlined is what they are saying. But I believe that is a hard lined negotiating position.

Anonymous said...

IMF bailing out Italy 600billion euro http://www.businessinsider.com/imf-600-billion-euro-bailout-italy-2011-11

Brent Barber said...

It definitely is negotiation, but I also think the German's will come up with workaround ways to keep the money flowing without having the ECB print money and buy bonds.  Germany has had the benefit of hard money for a long time and I think they believe a moderate to significant amount of pain is tolerable in order to maintain that benefit.  Unless things get really bad, they just keep working through things like they have been for the last couple of years.

I still the market can rally as business is good and the improving US economy will help drag Europe up.  Let's say you get 4% worldwide growth next year plus 2% worldwide inflation.  That still adds $3 trillion to a worldwide $60 trillion economy and a lot of problems can be fixed with $3 trillion.