Right now, we’re seeing much the same global reaction we saw after many of the union’s previous 13 crisis summits:
Officials are congratulating themselves for doing next to nothing. The media is proclaiming the meetings “successful.” So are all stock markets and currencies except for the dollar.
But let’s consider the real news:
— There are no details on how the ECB will raise the money needed to fund the bailout mechanism to the tune of $1.4 trillion. The ECB is very reluctant to just print money like the USA FED has done in the past, so where will the money come from? Nobody knows!
— Even Europe’s banks have no idea where they’re going to get the $150 billion of additional funding that they’re being ordered to come up with. Plus, insiders say that the requirements are so liberal that even troubled banks could avoid compliance with little if any trouble.
— And perhaps worst of all, savvy analysts and traders know that $1.4 trillion, as large as that figure is, is nowhere near enough to kill Europe’s debt crisis in its tracks. Experts predict that as much as $3 trillion will be needed!
So where’s the beef behind Europe’s latest news? WELL, THERE IS NONE!
The next steps I believe are predictable: On the short term, over the next few days, the reality of the union’s hopeless situation will set in with investors. The euro will continue its collapse. And unless I miss my guess or a miracle happens over night, the investments I use at times like this will skyrocket in value.
Good Trading
Erik