Thursday, June 7, 2012

The Market's Up, But Don't Let That Fool You

To the casual observer, the market performance over the last few days would suggest that things have changed dramatically.  That Retired Guy (TRG) is not so sure.  The Fault Lines in the Euro certainly have not become any less precarious.  Of course there has been market commentary linking the moves in the market to the prospect of direct capital injection into Spain's banks from the European Union.  TRG is not convinced about this either.

The fact is that on any given day, it's damn hard to explain what the market is doing with the actual facts of world events.  In the latest news, there are two New York Times articles that demonstrate that things are still pretty bad in Spain and Greece:

Greece Going Broke
The title say's it all.  Greece is running out of money, and the EU is not going to be happy about providing more.

Spain Holds Trump Card
This article puts a positive spin on the idea that Spain will enter bailout negotiations with a strong bargaining position.  It's true enough, but TRG fails to see how difficult negotiations are somehow a good thing, as if the situation in Greece, Ireland, and Portugal would have somehow been better if the bail out countries had gotten a better deal for themselves.  The fact is that German voters will NEVER think that the PIIGS are doing enough, and the PIIGS will ALWAYS think the austerity is too extreme.

So the market's up, but the storm clouds are as dark as ever.

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