Thursday, October 27, 2011

Is The Near Euphoria Today About A Deal To Take A Writedown Really Warranted?

The markets are staging a relief rally today over the new European debt deal. Thus the downward pressure on the markets from the Europe debt crisis removed for at least a few days. However, writing down debt does nothing to solve the enormous budget deficits and soft economies in southern Europe.

The problems in Greece certainly have not been solved. Public sector workers have announced occupations of ministries and public sector buildings for Wednesday 26 October. Lawyers will have a four day strike on 26-27 October and 3-4 November. Teachers have a 24-hour strike on Wednesday 26 October. The unpopular austerity measures will do nothing to stimulate the growth Greece desperately needs to get out of their severe recession.

It is only a manner of time before the European debt crisis is back in the news and exerting downward pressure on the markets.

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