January 23, 2013

Betting Big on Europe's Bad Economies

Patrick Smith, Fiscal Times

AP Photo

an you believe what is going on in the European debt markets? A few months ago the sky was falling and the euro itself was given no more than an even chance of surviving. Now investors cannot get enough of the sovereign bonds issued by Spain, Italy, Portugal, and others. The euro, to growing worry, is at a ten-month high against the dollar.

 

It makes no sense. So do not get too comfortable with the thought that Europe is in recovery mode. Better to brace for a serious correction. The Dow Jones industrial average is now at 13,650—not its record in 2007 (October 9, when it hit 14,164), but getting close.

On Monday the FTSE Index in London hit a record. This exuberant trading activity is highly vulnerable to the kind of reversal in the European debt markets...

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TAGGED: Eurozone, Spain, Europe

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