There is an old joke.
A banker, who is struggling, turns to his colleague and tells him that he has a solution to their problem “let’s borrow our way out of debt”.
This time it is no joke.
After many months of buying up the debts in their government bonds the banks of Spain and Italy may be running out of money. They have spent more than 1trillion dollars helping the governments to try and borrow their way out of debt.
When the ECB began the bailout in December of 2011 and again in the spring it was with the purpose to shore up the European Community and end the years of worry about sovereign debt issues.
Apparently the governments of Italy and Spain have not been able to cut back on their spending habits and the reserves that the Central bank has given them may not be enough for the countries to be able to withstand a collapse.
If the ECB is forced to lend more there is bound to be a lot of friction with Germany as they made it clear after the last round of lending that they were not going to be in any mood to keep funding Italy and Spain.
Last spring the Greek sovereign debt issue helped to plunge the world’s stock markets into a frightening fall that didn’t end until the fall rally.
Will we see a rerun of 2011?
Is this information already being discounted by the markets?
Certainly there will be some market effect whether it is up or down remains to be seen. Like all markets you will need to be nimble and be ready to react to the market conditions. You must trade the market that you have and not the one that you want. That will take discipline and that is what I can teach you to do. To contact one of my financial consultants and learn how I can teach you how to make successful trading decisions, in any market simply click here:
Keep those stops tight.
Todd “Bubba” Horwitz
P.S. We run the fastest growing online options community. With weekly webinars and a very energetic forum, my team and I are always looking for great risk/reward opportunities. Click on the link below and become a member of my community today.