Financial crisis accelerated in EU markets fell sharply

 Sahit Muja

 Sahit Muja: Financial crisis accelerated in EU markets fell sharply.

European stock markets fell sharply today as fears grew that ECB action alone cannot save the euro.To me the worst joke is how markets went up when Draghi made his unfounded promise last week.

Last week, Draghi had promised he would do everything to save the euro, raising hopes the ECB would intervene directly. And now markets are down as Draghi emphasized that ECB action alone cannot save the euro.

Everywhere you look, it is the consumer that lacks money to spend, driving down demand. But as soon as a central bank announces they will inflate some more of people's savings away, investors trip over each other to buy a share of this wonderful economy. So much for investing on long term fundamentals.


Do you folks really think the recovery could start one of these days? By printing more money? It appears that throughout world financial markets "investors" (really "traders") have very short time horizons.

They cheer every central bank move that reduces tomorrow's interest rates, since they are using OPM which becomes cheaper to borrow.
The true investors are being very guarded with their "investments" (aka capital spending and hiring).

The reality is that nobody has the money to pay for credit fueled growth of the last decade, neither the US nor Europe, not even Germany. You do not solve a debt problem with more debt, at some point the debt has to be restructured and someone is going to take the losses, mainly the banks.
This has to end badly.

Austerity is not a destination, it is a path. Handled right, austerity can lead to prosperity if governments and individuals take advantage of it to renew their economies. Handled wrong, it leads to chaos and poverty.

The euro crisis was caused by the reckless spending of southern European countries and the reckless lending of French & German banks.

Reckless spending and reckless lending are two sides of the same coin. The French & German have decided to make only the reckless spenders suffer through austerity to bailout the reckless lenders.

The bailout for Greece was in effect a bailout for French and German banks who held most of Greek debt.

Sahit Muja
President and CEO
Albanian Minerals
New York