Posts Tagged ‘The Financial World According to Inya’
While perusing weekend financial press, I could barely smother a chuckle. Again the economists and various experts are puzzled over how something relatively small, and thus presumed insignificant, can threaten to bring down an entire institution. The first time this question arose three years ago, it was the U.S. subprime mortgage mess that had almost choked the global economy to death. This time it is tiny Ireland with a population of less than five million that is threatening the survival of the entire Eurozone.
Ireland’s taking the bailout from the European Financial Stability Facility, put together by the European Union (EU) and International Monetary Fund (IMF) when Greece was in trouble this summer, brought little comfort to the global markets. If nothing else, it has actually elevated fears of government debt default. The alarm bells have gone off for Portugal and Spain, while risk premiums, insuring the bondholders of Irish, Greek, Portuguese and Spanish bonds, have gone considerably higher. At the same time, you could say that the market mood has gone considerably darker.
Volatility abounds and it is coming from every which direction. The Eurozone’s fiscal problems unfortunately persist. Inflation has become a real threat in China and other emerging markets. The U.S. Federal Reserve’s second round of quantitative easing is controversial and, as such, has only dialed the knob on volatility up.
The past few months have given investors a crash course in what makes commodities tick. Your PROFIT CONFIDENTIAL editors have discussed quite a collection of factors that drive commodity prices, such as currencies, emerging markets, economic output, supply and demand imbalances…even weather was mentioned as swinging a few punches.
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