I sagely predicted the market would drop on Friday. My thinking was that Friday is the most volatile day of the week anyway, and everybody would be disappointed with the Presidential address on Thursday night. However, in addition to that, there were a number of rumors coming out of Greece and Brussels, which deeply unsettled the market. The Dow dropped 303 points.
The first rumor, which turned out to be true, was that an important director of the ECB was resigning over the ECB's continuing purchases of government bonds from Europe's weaker states. Internal dissension like this rattles investor confidence. The second rumor, which may be true or not, was that Greece will default on Monday.
At this point, I don't think Greece can be saved. While Europe has the resources to do it, it doesn't have the decision-making capacity to deal with it. It is not the United States of Europe! In the U.S., numerous cities and counties have taken bankruptcy, and we already have a bankruptcy system to deal with it. But, nobody knows what will happen in Europe. Once again, we are plunged into the unknown!
Jim Rogers is a legendary investor who is so confident the U.S. is a failed state that he moved his family to Singapore. Yesterday, he was hoping Greece would fail quickly and let Europe start cleaning up the mess. In a display of pure Austrian economic thinking, he advocates letting the market function like a barracuda in the short run, inflicting massive pain for the sake of efficiency, but functioning like a benevolent dictator in the long run. From the standpoint of economics, he may be right! From the standpoint of a long-term investor, he may be right! From the standpoint of a short-term investor . . . run for the hills . . . or Singapore.
The first rumor, which turned out to be true, was that an important director of the ECB was resigning over the ECB's continuing purchases of government bonds from Europe's weaker states. Internal dissension like this rattles investor confidence. The second rumor, which may be true or not, was that Greece will default on Monday.
At this point, I don't think Greece can be saved. While Europe has the resources to do it, it doesn't have the decision-making capacity to deal with it. It is not the United States of Europe! In the U.S., numerous cities and counties have taken bankruptcy, and we already have a bankruptcy system to deal with it. But, nobody knows what will happen in Europe. Once again, we are plunged into the unknown!
Jim Rogers is a legendary investor who is so confident the U.S. is a failed state that he moved his family to Singapore. Yesterday, he was hoping Greece would fail quickly and let Europe start cleaning up the mess. In a display of pure Austrian economic thinking, he advocates letting the market function like a barracuda in the short run, inflicting massive pain for the sake of efficiency, but functioning like a benevolent dictator in the long run. From the standpoint of economics, he may be right! From the standpoint of a long-term investor, he may be right! From the standpoint of a short-term investor . . . run for the hills . . . or Singapore.
