Monday, May 10, 2010
They think its all over...
Telegraph: Euro jumps as markets welcome €750bn rescue
The euro soared on Monday morning as investors reacted with initial relief at the €750bn plan to defend the single currency and European Monetary Union from potential collapse.
Posted by alan @ 07:49 AM (1920 views) Add Comment
48 Comments
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1. techieman said...
Quelle Surprise!
2. andrew said...
A week ago there were problems raising 60bn for Greece and now 750bn is found under the mattress ?
Something not quite right here.
3. p. doff said...
'The Euro jumps'. - Oh dear, what a catastrophe for the eurozone countries.
I mean, we brits were told by our government that allowing the £ to collapse was beneficial for the UK because it boosted our exports and hence our industry.
Seems odd that Darling should now think it's ok for the UK to hand over £8billion via the IMF to support somebody else's currency, doesn't it?
4. matt_the_hat said...
Will the UK have access to this money??
5. refusetobuy said...
http://www.zerohedge.com/article/eu-pulls-out-nuclear-option-proposed-500-billion-euro-bail-out-package-largest-history
One commentator
"This way of handling an unfunded liability crisis by throwing more fiat (gas) into an economy (car) exhibiting deflation (parked) is truly pitiful."
Not sure the analogy is fully formed, but it made me giggle.
6. mark said...
this is only enough money to bailout spain, portugal and another small country, there won't be any left to bailout UK
7. andrew said...
Others had commented that the UK could not inflate it's way out of trouble because of globalisation, it now looks like all major currencies are going to use inflation after all.
8. refusetobuy said...
"The creation of an EU rescue mechanism with powers to issue bonds with Europe's AAA rating to help eurozone states in trouble -- apparently €60bn, with a separate facility that may be able to lever up to €600bn"
Who will buy these bonds? Am I right in thinking that they are just going to be swapped for each countries debt, so if a member state defaults the original investors don't loose out because they now hold a shiny EU bond. The EU collectively looses out. So the PIIGS (and others) risk has been spread over all member states.
What happens if the EU doesn't collect enough money. Was there any mention of QE by the EU central bank?
9. uncle tom said...
The detail is still a little vague, but if the market interpretation is correct, this is exactly what the German population have been fearing - and Merkel appears to have betrayed them.
The effect of this measure seems be an exercise in sharing the pain.
Initial market reaction pushed German borrowing costs up by 0.2%, while those of the more indebted eurozone countries went down.
The stupid bit is that it doesn't provide a long term fix - it just delays the inevitable..
10. str 2007 said...
Sorry I should have put this post here not the article below.
Struggling to see the good news in a huge bailout for Greece (currently) followed by Portugal, Spain, Ireland, Italy & UK.
Good news, would have been all these countries having to sell an esset (Islands IMO) on a 100 year lease or something like we did with China and Honk Kong.
It just seems to me that there's never any price for utter stupidity and profligacy these days. It just seems to get sorted out with a weekend meeting and another big set of numbers.
Given we're all skint, where exactly does this bailout money come from.
Or are we not skint and never will be because we can just have a weekend meeting and arrnge some more money ?
A simple enough question you'd have thought, but did no-one ask Greece when they joined about the well known fact of their retirement age (53 years) and the fact that most aren't paying income tax to the correct level.
A visit to Corfu some years ago revealed a remakable number of unfinished houses and extensions. Within a day I'd discovered you anly pay tax when a property build/extension is finished - so they never finish them.
If a holiday maker can suss that out in a day what exactly are these Euro MP's upto for all the money they earn (I say earn should read are paid).
The smaller/newer Euro members haven't even been mentioned yet, but as countries hae joined their own economies each time have been further and further down the scale.
What sort of trouble are they going to be getting into ?
11. chrisa said...
As I postulated on here last week the problems with Greece and the PIGS will not lead to the end of the Euro but rather be used as an excuse to recreate the EU into a United States of Europe, which was wanted all along. To this the UK will be told by the IMF that it must join when the IMF are finally called in. Anyone spell STITCH UP?
12. techieman said...
A plaster when amputation is required.... Short term as Uncle Tom says the markets like it. The dollar / Euro trend was over-extended anyway, so its typical of a bounce back with some short squeezing going on.
That is the name of the game. A turnaround Tuesday? Who knows - the only thing we do know for sure, is that volatility presides, and is a double edged sword.
13. paranoia blue said...
All froth, no substance!
14. jack c said...
Robert Peston has a good piece on this - "crisis postponed" - which pretty much amplifies the comments on this thread.
www.bbc.co.uk/blogs/thereporters/robertpeston/2010/05/eurozone_crisis_is_postponed.html
15. paranoia blue said...
Hmmm, Bourses up, on average, over 6%; gold just down around 1%
16. jack c said...
paranoia blue - maybe some of that bail out cash is already finding it's way into the markets
17. str 2007 said...
Cheers for that link Jack
Judging by most of the comments, not many people see this as a long term fix. Quite surprised the markets have moved so far really.
18. jack c said...
str 2007 - yes I'm also surprised the markets have moved up so quickly (recouped last weeks losses) but I suspect there will be huge amounts of volatility during next few weeks.
19. techieman said...
Jack c and str2007 - take a look at the contrarian trader video, i posted below, and the charts in the comments.
I am a alot less surprised - if you watch the video you will appreciate why. The dax has performed a backtest of the trendline, the S&P has found resistance at approx 62% retrace. Technically the FTSE was not so good - a move of approx 55% back but 5400 looks reasonable.
Of course it depends on what those damn yankees do - personally i think it gets chucked around a bit.
20. flashman said...
The last few days should be a lesson to anyone currently dabbling in, or thinking about trading (the lesson is don’t do it). The forces involved in the markets are opaque, mercurial and massive. Every day is different and this will always be the case. There is no “method” that will decipher the markets and it is just a coincidence if something appears to work. Even if you are lucky enough to have direct access to the actions and opinions of the major players, you will still end up surprised and skint. I don’t mean to step on anyone’s toes and if you disagree then fair play to you.
One last comment…don’t confuse the markets with the economy. They are separate entities that largely decoupled years ago
21. techieman said...
Flash :
"My advice to most folks is just be careful and stay in cash... But i suppose that does sound a bit patronising. I echo his basis stance - you could easily get absolutely obliterated in this market. Todays move back up this am in the S&P is a case in point. Its going to be interesting... to say the least."
Contrarian trader thread below @ 2.
I dont know if you read any of the posts last week re the moves on Thursday. But i can only imagine what would have happened had it been in the European trading day. Absolute carnage I should think. [Of course everyone on here was unscathed.... funny that!].
22. paranoia blue said...
@ 20
The only way to make money, IS TO TRADE!!
Not only, in the Bourses, but also, in every other marketplace ATB
23. techieman said...
PB lets not be silly.... You cant trade and make money if the spreads are ridiculous or if there are no bids or no offers. Plain dumb comment.
Thats the scary stuff these days.
You either have to be positioned before the move or wait for the spreads to get back into line or just be very very lucky.
24. 51ck-6-51x said...
As many have said this is simply postponing any adverse effects in an attempt to spread and hence dilute the pain. There is a chance it could work, hence markets react, it opens up opportunities in the short term hence markets overreact.
I think (pessimistically?) that the suggested resolution will be that the Euro-zone needs to be a single sovereign or something that paves the way towards this, at least monetarily - which is diagrammatically opposite to the solution I'd suggest...
When will the penny drop that the way forward is more currencies, not less?
Furthermore, when will we realise that we should have multiple, competing currencies across any given region, rather than the 17th century approach of a central banking model?
25. 51ck-6-51x said...
TM, I'd prefer luck over skill any day of the week :)
26. techieman said...
six six six - which golfer was it who said "the more i practice the luckier i get".... still not sure this applies here. Perhaps i was a bit harsh on PB, he maybe means that general trade must take place for nations to prosper. Soundbites can oft be cruelly misinterpreted!
27. paranoia blue said...
“Techers” @23
Not quite sure what you mean by massive spreads in the markets that I deal!
My worldview is “long” on gold and associated shares, and I have a basket that I revolve around : CEY, POG, AVM, OXS, CLF etc [and a few other commodity shares – oil, gas, pt etc] – buying on dips
I’m default short on: travel and leisure; media & computer, retail, real estate, and various others: buying on spikes!
Re: Indexes – obviously, default-short on the Bourses, certainly with today’s nonsense, and long on spot gold, but one has to spend all day watching a screen, and the good lady – is residing with her sister!
However, the next big problem will be the GBP
28. paranoia blue said...
Correction "buying on spikes" = "shorting on spikes" :)
29. techieman said...
[sigh] ok PB. I stand corrected last Thursday was obviously just a bad dream i had, and had nothing to do with the real world in which you live. And to think i had given you some credit... aw well...
30. paranoia blue said...
Wall Street – opening: classic nonsense – the tail wags the dog!
PS Forget the Fannie statement!!
31. Paranoia Blue said...
techie - you been drinking mate;)
NB I make my best instanteous trading decisions, with a glass of red at my side! ATB
32. fjcruiser said...
and unemployment rising, and inflation rising, and debt rising but "this time it's different.....".
33. jack c said...
Wall St up 505 points as I type - but very difficult to estimate where we will end the week
34. techieman said...
... or even the end of the day/ hour / minute :-).
35. Paranoia Blue said...
You need to chuck out your charts, mate, and follow the obvious contrarian path.
“Sheeple” jump in all the time, look at the contemporary Falkland’s farce! – there will be lots of sore heads, fairly soon [One cannot short any of them!!]
I say again, I only have a few “big-picture” worldview-defaults, and continually deal, with those in mind.
NB I had big problems, last year, because of the Keynesian pseudo-support that, at best, only delays, and at worse, exacerbates the problem, big time!!! However my trust in gold saw me through!!
It is, most definitely, CYA from now on!!
36. jack c said...
techieman - now it's only up 426 as I type - conclusion markets can fall (or should that be plummet) as well as rise (LOL)
37. paranoia blue said...
You need to chuck out your charts, mate, and follow the obvious contrarian path.
“Sheeple” jump in all the time, look at the contemporary Falkland’s farce! – there will be lots of sore heads, fairly soon [One cannot short any of them!!]
I say again, I only have a few “big-picture” worldview-defaults, and continually deal, with those in mind.
NB I had big problems, last year, because of the Keynesian pseudo-support that, at best, only delays, and at worse, exacerbates the problem, big time!!! However my trust in gold saw me through!!
38. techieman said...
PB two words "Joe Granville". Can i play with some adults now, that actually know what im rambling on about last week?
39. Paranoia Blue said...
@36
OK,mate.
However as I noted, I made over £10K on the dip.
Right now, I very short on the Bourses, and very long on gold, and asociated, however opening and closing as I type.
PS I've been blogging on lse. co.uk, for years. ATB
40. paranoia blue said...
OK whatever mate!
NB I've been blogging on lse.co.uk, for years. You can check out most of my thoughts, there, if youn wish. ATB
41. flashman said...
None of the bearish traders in blogworld got creamed in today’s massive upswing. They also miraculously avoided losses when the market kept inexorably rising against their positions, for more than a year. They did however make a lot of money during Thursdays dip.
42. techieman said...
now now flash.... don't be jealous it doesn't suit!
43. Skeptical First Time Buyer said...
Time to forget spreading the risk and go full casino.
I'm all in on specific shares these days. Rockhopper did me well, I new they would announce a find.
The next target is BP, if they can fix their leak I'm making money, if not that's my Rockhopper gains wiped out.
But at least with oil, we won't stop buying it. You can just wait a long time and you will get your money back eventually.
Price is fixed by OPEC after all.
44. paranoia blue said...
The upswing is looking a trifle precarious already!
The shiny stuff, is almost back to where it was.
PS One really has to trade these markets, or lose a fortune ATB
45. quiet guy said...
Stupid question: what is 'ATB'?
46. paranoia blue said...
All the best :)
47. quiet guy said...
@paranoia blue
Thanks for that. I was expecting something about trading strategies or whatever.
Well I did say I was stupid :)
48. flashman said...
techie @ 42: 'jealous' is a rather bizarre interpretation of my comments. Incredulous or contemptuous would be nearer the mark. I'm afraid that I just don't believe any of the tales told by these bedsit trading warriors.