Sunday 7 August 2011

STOCK MARKET; NO RELIEF THIS WEEK !!!


During this holiday period the financial and banking leaders of the "G 7" have nonetheless been frantically discussing what solution can be found to avoid a crash as severe as in 1929. These discussions will continue this coming week and this in itself will provoke panic on the international stock exchanges and in the banking system.

Simply said, the problem is that Ireland, Portugal and Greece have been bailed-out to stave off a run on the EURO and nobody really thinks that Greece will ever be in position to repay the loans it has received.  To compound the problem, Italy and Spain will also need help in the near future, this year in fact.

In Europe generally, there is a small recession which has resulted in increasing unemployment and this does not augure well for the future.  People are nervous.  Should the solution adopted for Ireland, Portugal and Greece (aid with repayable, low cost medium and long term loans) also be the same solution for Italy and Spain, both with bigger needs than Greece ?  

Does the EU have enough resources to make more risky loans ?   Will these loans not become "Junk Bonds ?   Will some EU countries not risk a down-grading by Standard & Poor's ?        

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