European Debt Worries Send Markets Lower
May 25, 2010
Posted by Jody Eisenman | Filed under Uncategorized
The Dow and S and P continued its’ descent today. A combination of European debt problems, the Gulf of Mexico oil spill, and dropping commodity prices sent the Dow down to a close of 10,066. Just three weeks ago, on May 3, the Dow closed at almost 1100 points higher at 11,154. Right now, if you look at most equity charts other than gold and silver, they look like they are falling off a cliff. General market sentiment on CNBC seems to be mostly negative, which is almost a 180 degree turn from a month ago, where it was tough to find a bear in the bunch.
The debt crisis in Europe is real, but it is tough to say how bad it will ultimately be. On the hand, there is the very legitimate fear that the Greece situation will spread. As I stated last week,
http://www.jodyeisenman.com/2010/05/1931credit-anstalt-2010greece/, there are several countries in Europe that are so heavily in debt that the IMF may be forced to do additional bailouts. Over the weekend, the Bank of Spain took over a smaller failing bank. Sound familiar?
On the other hand, most crises, as bad as they may seem at the time, tend get resolved. In other words, betting on a global financial meltdown is a high risk bet that is almost always wrong. You also only get to be right once!
I think the market direction is now somewhat negative, but I expect there to be volatile spikes in both directions.
