Confusing issue

Is the European economy crumbling? Depends on which financial market you consult. The equity markets say it's doing fine. The debt markets say it's headed off a cliff. They can't both be right. (From Slate).

Equity markets respond to liquidity. And the European leaders are throwing a lot of money to their solvency problems. This is the reason the US stock and European markets are soaring. The economy may eventually respond. But as things stand now, the issue is the huge amount of the liquidity in the system. And stocks love it.

My point is that the European economy and the financial markets respond to two totally different stimuli.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

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