Markets Responding Faster


The latest application of sticking plaster to the Euro saw a rapid response by the markets.


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Previously, the markets have rallied in the hope of a solution to the Euro crisis and taken several weeks before they have fully appreciated how little has been achieved by the latest fudge. This week saw the markets rally strongly on news of a massive bailout for Spanish banks but it only took minutes before the markets saw how little had really been achieved, falling back and down on last week.

Within the EuroZone, Ireland, Portugal and Greece protested that Spain had being given far more money than they had but not been required to become a slave state of Germany paying extortionate interest rates and having to accept massive cuts to the economy.

This is perhaps the most scary day of the long running Euro crisis. Not only did the markets show their disappointment very quickly, but the desperation of Eurocrats and the political elite were very cleary shown and the gross unfairness of the EU was graphically exposed.

For the first time, it was appreciated just how widespread the problems are within the EuroZone and how nothing short of a major restructuring of the Euro will achieve a sustainable solution. Even that may prove inadequate because it would enforce actions that countries like Germany will find very hard to accept. Once the weakest countries are expelled from the EuroZone, the wealthier countries will face a series of very difficult pressures that will see their economies stall. At the heart of the problems is Germany where the political elite want to rule Europe but where the German people are unprepared to send a large percentage of their wealth to prop up countries they see as profligate. That leaves very little room for decision taking and explains why the Euro crisis has dragged on for so long with its political leaders avoiding decision making.

At the same time, economists are starting to ask if there is any EuroZone country that is really stable, or whether it is a collective confidence trick that hides a systemic instability across all EuroZone countries.

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