Wake-Up! There’s No Orderly Fix for the Debt Crisis
Wake Up, European Bond Auctions Will Start To Fail, How Much Evidence Do Investors Need?
by Gijsbert Groenewegen
Markets keep on trading on “uplifting” headlines instead of digesting the grim fundamentals setting the markets up for a huge fall.
U.S. stocks closed sharply higher up 291 points on Monday as investors reacted to a report that a record number of shoppers turned out for Black Friday, the traditional start of the Christmas shopping season. Shops pulled $52.4bn over the four-day period that starts on Thanksgiving, up 16.7% from last year, according to figures from the National Retail Foundation. Though what we thought was the most surprising was that no financial commentators where asking the question how the Thanksgiving sales were financed considering the overwhelming debt we are facing.
In Europe, various reports pointed to a fresh bout of efforts by policymakers to stem Europe’s sovereign debt crisis. The Wall Street Journal reported leaders are moving closer to a fiscal union, which many analysts say is key to preventing euro-zone members from running up unsustainable debt levels. Though a lot people don’t seem to understand how long it will take to get all European states to agree next to that it is no solution for the unsolvable debt problems we are facing. Speculation flourished on other possible moves to keep the euro zone from falling apart, a dramatic outcome that has appeared more likely as investors have dumped Italian, Greek, French and Belgium debt. Though the International Monetary Fund denied a report in an Italian newspaper that it was considering a €600 billion ($801 billion) credit line for Italy. Also a story in a German newspaper reporting that Germany was considering issuing a joint bond with other triple-A rated European countries; the German finance ministry denied the report. The market is rife with speculation hence the incredible volatility in the markets we are facing.
Downgrades and rising interest rates are the last step before default