Monday, May 10, 2010

The Trillion Dollar European Bailout

I'm not finishing researching the details, but the markets have reacted positively thus far to a massive bailout of just about everyone in the Eurozone.

As I've stated many, many times - never underestimate the power of the central bank in the short term.

While this might relieve short term pain it will only increase the long term pain. This will not solve Europe's problems, only extend them. In fact it could set off a raise to devalue as the only likely scenario of funding $1 trillion of bailout funds is through money printing.

The markets have reacted positively now, but the fact that 3 months ago everything was great in Europe and now they need a Trillion dollar bailout fund should be a wake up call that risk exists and should not be ignored.

Regardless, I don't know where this market will take us now, down would not surprise me, nor would up....probably why I'm not a good speculator!

I'll keep you updated as I digest this package and attempt to understand its implications.

Scott Dauenhauer CFP, MSFP, AIF