The Euro Crisis Is No More, Right?

Mar 4, 2012
J. Webster
Comments Off on The Euro Crisis Is No More, Right?

OK, so everything is calm and cool now in Europe. Everything has been solved. The Europeans are going back to drinking coffee on sidewalk cafes and talking about how Barcelona is better than Real Madrid and how much more culture they have than Americans. Tapas and cervecitas and cigarettes for everyone.

All the citizens are happy and content with all the austerity measures now in place. All those spending cuts in eduction – it’s all good. Sure. Yeah, right. When pigs fly. Unlike say Saudi Arabia, awash in oil money, Europe can’t all of a sudden pay off its citizens so they remain content and calm and don’t protest. No, the Spanish government is cutting back on education and turning off the heat in class rooms. So, yeah, while they kids have no jobs they also have less chances at going to school.

Do you think all the young people in Spain are going to abide by the governments changes? Youth unemployment is rushing towards 50%. What are all those young tios and tias going to do with all this time? Well, I’m guessing this is what all the unemployed youngsters will be doing with their idle hands. And I’m going to go out on a limb and say this will happen in Spain, Portugal and Greece. How about Germany? Well they’re going to protest bailing out all these other countries. This ain’t over yet.

Meanwhile, the stock market in the United States, shuffling up 500 points and then down 500 points every other day for a few weeks when the European crisis was in full swing, now only goes one direction, and that’s up. Stocks are green and there’s nearly no red on the screens day after day. The pain is gone.

Do you think this is going to continue? It can. It might. But for just how much longer. How much of all the good news in the United States, from improvements in the job market to the recover in the housing sector is built into the stock market already?

And, when the stock market has had a good run up for months, it’s ripe for a pull back when a black swan does appear. Whether that’s the renewal of the crisis in Europe or some unforeseen thing like an earthquake or an oil spill or another Arab Spring.

Image Source: MSNBC

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