U.S. Stocks Rally to New Highs on Empty Greek Promises

Stocks rallied today to close at all-time highs (again) after a deal was announced that basically delays Greece’s responsibilities to repay loans and follow required austerity measures as part of their bailout.  The reality is that this changes nothing; it simply puts-off the pending implosion of the Greek economy and the probable end to the EU resulting from a Greek exit from the euro.  Nothing has changed – the risks are as great as they ever were.  In fact, things will very likely get worse over the next 4 months as Greece will almost certainly sink ever deeper into economic ruin and chaos.  The current government was voted in on promises that they would reverse austerity measures the Germans imposed as part of the bailout.  When the government can’t deliver, Greece will go through yet another round of elections, during which the winner will no doubt make the same empty promises which they will have no chance of fulfilling.  Germany is not going to relent on the austerity measures and Greece will be forced into default.  It is plain to see.  

I am not sure why stock rallied on this news.  One thing is clear – the “investors” who are driving market performance at-present are clearly short-term speculators that have no intention of being around in 4 months when we are forced to revisit this issue.

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