As the debt crisis in Spain continues to cause widespread alarm, share prices have been falling and the value of the euro against the US dollar fell at 16.00 today to a new bid price low of 1.2050.
It was just yesterday – but seems much longer ago – that we reported it had gone below the 1.21 mark. Already it is half way to falling below 1.20.
The situation with, as in our report yesterday, the seriously indebted Spanish regional governments is mirrored in increasing and hardly unanticipated difficulties in Italy, with ten of its cities – including Naples, Palermo. Alessandria and Reggio Calabria – said to be on the edge of bankruptcy.
The immediate consequence can be seen in the behaviour of the markets with the major stock exchanges down:
At 18.00 (24th July) this was the positions:
- FTSE Down -34.64 (-0.62%)
- DAX Down -28.92 (-0.45%)
- CAC Down -26.85 (-0.87%)
- DOW JONES Down -140.29 (-1.10%)
- NASDAQ Down -24.37 (-0.84%)
What occurs now will be fairly crucial. Ideally there should be a recovery from the current level as the implication if no political will shown takes the currecies toward parity next.
The big problem may be the Olympic photo trough keeping politicians away from the real problem s and allowing what my trends say could happen to happen giving new meaning to Olympic Legacy . Guess the next week its crucial.
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It did recover a little today – back to 1.2152.
Your ‘Olympic legacy’ analysis is interesting.
Given today’s uncomfortable economic output figures, is there any reason why the UK could not have used QE to pay for infrastructural development?
The £375BN we’ve ‘printed’ already has gone to buy bank debt, leaving the banks flush with cash they were supposed to lend on to business – but instead hung on the money against a rainy day (for themselves).
This means that the economic impact of QE has been minimal for its volume. £375 BN would have done something useful on infrastructural development and on the construction industry figures that are so badly down.
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Keep buying gold the end game is not far off.
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