Headlines are almost unanimously attributing every market pop and every drop to Europe. There is no denying the sovereign debt crisis. There is no denying that the roots of that crisis lie in the policies of the last several decades. There is however considerable amount of denial about the situation in the US, and that has to be responsible for some of this market nervousness. This market is behaving like a teenager with hormones running amock. One aspect of teenage behavior is to conveniently attribute causes to something other than yourself in times of stress isn’t it?
And the German parliament votes on Greece tomorrow. Methinks it passes with all sorts of constraints on Greek economic behavior. It is not in Germany’s interest to give up on the Euro. Imagine how high the Deutschmark would be if there wasn’t a common market and how troubling that would be for the German economic engine. Of course that does not mean anything is fixed. That will take forever, so I am only reading short-term tea leaves. As well as an FT special report from last Friday (here).
What I am not sure is whether US markets have it in them to pop for the umpteenth time on that news. End of quarter games suggests they just might. These games also mean that asset values are affected adversely when the perceived garbage is being trashed and will lead to useful long opportunities later. We will find out soon enough.