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The time for optimism has passed. Now it’s time to panic.
That’s the sense running through trading floors Tuesday.
Stocks are tumbling across Europe. Bank stocks are leading the way, with poor old Dexia down by 33% (that’s not a typo) at one point. Frankly, who’s counting now? Rightly or wrongly, the bank is now seen as a dead man walking, though France and Belgium say they’ll stand behind it.
The Australian dollar–possibly the biggest canary in the global financial coal mine–is upset because the central bank suggested it could cut rates as soon as November. The euro has hit a new 10-year low against the yen, and a new eight-month low against the dollar. Emerging-market currencies are sinking, with Hungary a good candidate as the next country likely to jump into the global currency-boosting intervention spree. Even Goldman Sachs–long one of the more optimistic banks–has trimmed its growth forecasts, and its euro forecasts too.
So, why the market panic? The eurocrats keep telling us that Greece is fine. Didn’t anyone get the memo? They just need a little more time to finish their reviews, and then probably review their reviews, so the Oct. 13 Eurogroup fin mins’ meeting is now canceled. But really, everything’s on track, Greece has enough cash to see it through to November (though that’s not what Greece says).
European Union President Herman Von Rompuy says he will “act in a forceful way to protect the euro.”
In short: it’s all going to be totally fine. OK?
Clearly, investors do not agree.
“It’s all gone mental,” said one London currencies trader Tuesday (we have taken the liberty of removing the expletives from his direct quote).
“The markets are in meltdown,” said Kit Juckes, chief currencies strategist at Societe Generale in London. The technocrat turkeys are “still voting for Christmas,” he added.
The scale of currencies moves we have seen so far Tuesday are relatively small, but that’s deceptive; the euro fell fast Monday, for example, and it’s certainly not picking up now.
The mood in the market has clearly shifted. The very clear fear is that the politicians have just left it too late to fix this mess, if indeed it was ever fixable. We could be entering the very nightmare that everyone has been hoping to avoid for the past two years.
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@Trader , so no commissions huh. Your own trading must be in the hundreds of million shares then ? That is constantly what we have been hearing for the last ten years or so “The potential is huge"¦"¦” so Mr.Trader when will this “potential” become real ? Have you expressed your views to other Traders or partners ? Do you trade manually or via computer ? Do you trade on margins ? Do you put up your own money or someone else’s who stayed in equities?
I am a trader; I haven’t gone mental. I do not earn commissions, just through my own trading. I am long the equity market, and do not think the Euro is toast. I do think we are seeing some rebalancing because of liquidation of positions. Stocks have been going down for more than ten years now, we are in the end phase of this. People have short memories. The potential is huge……
And yet the Euroholics in the UK are digging deeper and deeper into denial. Ken Clarke, Tory wet wet wet, says the Euro was a great idea, just run badly. Cameron says the UK people don’t want out of the EU – he really does to get out and meet some struggling non rich people. The EU and Euro are classic examples of liberal elitist hubris: and the wings of this particular Icharus are melting causing the proud idiocy to plunge to doom. Of course the liberal elites will not be suffering penury, they are on vast pensions and quite happy.
loved the lead graf!
1.) Traders make comissions whether stocks go up or down. 2.) Traders instil the word “fear” to keep their comissions going 3.) Stop computerized trading – 7 plus trillion shares traded means that each person on this planet traded a whole bunch of stocks – not. 4.) Europe has been in large debt for over a hundred years. So what’s with the hype now? Seems to me all of these so called financial wiz-kids or so called analysts really don not know squat. 5.) Wall Street preaches “don’t panic” keep your investments, don’t pull out… So what does Wall Street do they PANIC because they know a computer will do the trading. What if they had to manually fulfill their trades ? They would complain of being over worked. 6.) I could go on, but you have gotten a chuckle out this already. 7.) Just one more item – what ever happened to common sense ?
The Source is WSJ.com Europe’s home for rapid-fire analysis of the day’s big business and finance stories. It is edited by Lauren Mills, based in London.
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