Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Dow 30k before End of 2020? - 13th Jul 20
Credit Market Investments Turned Into End-User Risk Again - 13th Jul 20
Investors Are Going All-In on This Coronavirus Proof Industry - 13th Jul 20
5 Vital Insights That You Can Gain From Instagram Trackers - 13th Jul 20
Stop Believing The 'Economy' Is The Same As The Stock Market - 12th Jul 20
Spotify Recealed as The “Next Netflix” - 12th Jul 20
Getting Ahead of the Game: What Determines the Prices of Oil? - 12th Jul 20
The Big Short 2020 – World Pushes Credit/Investments Into Risk Again - 11th Jul 20
The Bearish Combination of Soaring Silver and Lagging GDX Miners - 11th Jul 20
Stock Market: "Relevant Waves Vs. Irrelevant News" - 10th Jul 20
Prepare for the global impact of US COVID-19 resurgence - 10th Jul 20
Golds quick price move increases the odds of a correction - 10th Jul 20
Declaring Your Independence from Currency Debasement - 10th Jul 20
Tech Stocks Trending Towards the Quantum AI EXPLOSION! - 9th Jul 20
Gold and Silver Seasonal Trend Analysis - 9th Jul 20
Facebook and IBM Tech Stocks for Machine Learning Mega-Trend Investing 2020 - 9th Jul 20
LandRover Discovery Sport Service Blues, How Long Before Oil Change is Actually Due? - 9th Jul 20
Following the Gold Stock Leaders as the Fed Prints - 9th Jul 20
Gold RESET Breakout on 10 Reasons - 9th Jul 20
Fintech facilitating huge growth in online gambling - 9th Jul 20
Online Creative Software Development Service Conceptual Approach - 9th Jul 20
Coronavirus Pandemic UK and US Second Waves, and the Influenza Doomsday Scenario - 8th Jul 20
States “On the Cusp of Losing Control” and the Impact on the Economy - 8th Jul 20
Gold During Covid-19 Pandemic and Beyond - 8th Jul 20
UK Holidays 2020 - Driving on Cornwall's Narrow Roads to Bude Caravan Holiday Resort - 8th Jul 20
Five Reasons Covid Will Change SEO - 8th Jul 20
What Makes Internet Packages Different? - 8th Jul 20
Saudi Arabia Eyes Total Dominance In Oil And Gas Markets - 7th Jul 20
These Are the Times That Call for Gold - 7th Jul 20
A Reason to be "Extra-Attentive" to Stock Market Sentiment Measures - 7th Jul 20
The Beatings Will Continue Until the Economy Improves - 6th Jul 20
The Corona Economic Depression Is Here - 6th Jul 20
Stock Market Short-term Peaking - 6th Jul 20
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

At Long Last the Euro Is Finally Being Saved

Politics / Euro Jul 02, 2012 - 06:03 AM GMT

By: Christopher_Quigley

Politics Best Financial Markets Analysis ArticleFriday the 29th of June 2012 will go down as one of the most important dates in the history of the Euro
currency. In the early hours of that fateful morning German resistance to a rational and comprehensive
resolution to the Euro crisis was finally crushed. It will take some time for the full implications of this
historic result to filter through to the markets but the fact that the dark cloud of dissolution of the Euro is
now passing can only be positive.



What happened? Why did Angel Merkel the German Chancellor finally "blink in earnest" as suggested in
our article two weeks ago? The answer is she was outmanoeuvred by Italy and Spain with the tacit
support of France. In essence she was totally isolated. Here is what SPIEGEL the German online
newspaper had to say about events:

"Angela Merkel took a tough stance ahead of the EU summit, insisting she would not make concessions.
But Italy and Spain broke the will of the iron chancellor by out-negotiating her in the early hours of
Friday morning. Germany caved in to demands for less stringent bailouts and direct aid to banks.

The key to getting your way in tough negotiations, of course, is to find your opponents Achilles' heel.
Italian Prime Minister Mario Monti and Spanish Prime Minister Mariano Rajoy did that on Thursday
night and early Friday morning in Brussels. And the result is a euro-zone agreement to allow the
common currency bailout funds to give direct help to ailing banks and to become active on
sovereign bond markets to provide relief on the financial markets -- free of conditions for the
countries in need of such aid.

With good reason Monti emerged from the late-night negotiations as a clear victor, having broken
Chancellor Angela Merkel's resistance. Monti together with Spanish Prime Minister Mariano Rajoy
secured easier access to the permanent euro-zone bailout fund, the European Stability Mechanism (ESM).
Euro-zone member states which fulfill the budgetary rules laid down by the European Commission
can now receive aid without agreeing to tough additional austerity measures. Strict oversight by the
troika of the European Commission, European Central Bank (ECB) and International Monetary
Fund (IMF) would no longer apply.

The agreement will allow the ESM to recapitalize troubled banks directly instead of loaning the bailout
aid to national governments in exchange for austerity commitments. That model had been called into
question after the EU agreed recently to provide Spain with €100 billion to prop up its struggling banks.
Investors, however, became nervous about Madrid's ability to shoulder that debt, and interest rates on
Spain's sovereign bonds had skyrocketed in recent weeks.

In addition, emergency aid funds will in the future be made available to stabilize the bond markets
without requiring countries, providing they are complying with EU budget rules, to adopt additional
austerity measures. Prior to the summit, Merkel had been against both steps, preferring to stick to
the rules that had already been hammered out and guaranteeing strict oversight."

From my own perspective it is astonishing that it has taken so long for the twin elements of the crisis to
be identified and segregated. Up until now, under German insistence, they had been joined at the hip.
What do I mean by this? Well prior to Friday the 29th Dr. Merkel was insisting that any assistance to
banks must go through Governments. Badly needed banking bailouts from the ECB were thus being
added to sovereign debt balances. These growing debt levels were affecting sovereign bond costs making
raising money in the markets prohibitively expensive. This increased expense was bloating day to day
government running costs despite the fact that "austerity" measures were being demanded by Germany.
The whole cycle was deflationary, self defeating and illogical. Friday's agreement changed this nonsense
and in summary has brought about two important "game changing" initiatives:

1. Banks can receive bailout funds from the ESM without affecting sovereign borrowing levels.

2. The new ESM fund can buy sovereign bonds directly thus lowering state borrowing costs.

As a result the risk of banking failure has been diminished and governments will be able to raise funds at
reasonable rates when the need arises.

Now by no means am I suggesting that everything about the Euro crisis is behind us but using the words
of Churchill: "now this is not the end. It is not even the beginning of the end. But it is, perhaps, the
end of the beginning".

Finally the banking aspect of the problem has been separated from the sovereign bond element of the
crisis. Why the process to identify and solve this fatal flaw in Euro policy has been so tortuous I will
never know but better late than never I say. Politicians can now go on summer vacation happy that when
they return in September a template in now in place upon which to build a secure and stable structure for
the future maintenance of the Euro currency. They will thus be in a position to remove for once and for all
the market risk of a potential demise of the Euro and with it a total collapse of the economies of the
fledgling European Community. Such a prospect was incomprehensible and as a result of Friday's action
by the European governments I think we can start to put this threat behind us. Will Mr. Market agree?
That remains to be seen.

(C) 2nd July 2012 Christopher M. Quigley B.Sc., M.M.I.I., M.A.

By Christopher M. Quigley

B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley was born in 1958 in Dublin, Ireland. He holds a Bachelor Degree in Accounting and Management from Trinity College Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the stock market in 1989 in Belmont, California where he lived for 6 years. He has developed the Wealthbuilder investment and trading course over the last two decades as a result of research, study and experience. This system marries fundamental analysis with technical analysis and focuses on momentum, value and pension strategies.

Since 2007 Mr. Quigley has written over 80 articles which have been published on popular web   sites based in California, New York, London and Dublin.

Mr. Quigley is now lives in Dublin, Ireland and Tampa Bay, Florida.

© 2012 Copyright Christopher M. Quigley - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules