Monday, February 21, 2011

Presidents' Day Oil Explosion

The markets were closed for Presidents' day so there was little notice to what was taking place overseas with countries around the world in full revolution.

This movement has begun with smaller nations, but will soon move toward larger countries (such as the Eurozone) as the sovereign debt crisis picks up steam.

Angela Merkel lost a key vote in Germany this week with the new "no more bailouts" campaign now front and center.

The coming Irish elections will be an important event to watch as the favored party has now announced they want to re-structure the bail out that was put in place a few months ago.

This will not stop the bail outs from occurring, it will just change who picks up the tap.  The ECB (their version of the Federal Reserve) will just begin to purchase all government bonds around the Eurozone with the printing press.

This is what we do here in the United States.  The Federal Reserve is currently purchasing 100% of our deficit through the first half of the year and the announcement of QE3 in June will confirm they will purchase the rest.  It is a far easier tactic than trying to convince to people to pay for it.

Is there any consequence for this type of action?

Pull up a chart of oil and silver in today's overseas trading and you will see the consequences.

Oil up 10% on the day.

Silver just crossed $34 and has begun to move violently upward.

Stocks are down in futures market.

No comments:

Post a Comment