Can you believe it? Yesterday, the market completely forgot about Europe, Spain, Italy, China, or the weak employment report of last week. Wow! How does it do that?
So investors now find Spain’s debt attractive. So what gives with that, as the “the street talk” is now suggesting it is not a matter if Spain will need a bailout, but when? I am fascinated by how all this works. Supposedly really smart people, maybe the same smart people who have been consistently wrong on the European debt crisis since 2009, are in disagreement with the folks whose job it is to understand and fix Europe’s problem.
The International Monetary Fund [IMF] hopes to gain governments’ agreement this week to raise its funds by more than $400 billion, around two thirds of the amount it said it would need three months ago.
So, let me get this straight. Three months ago, the IMF thought it would need $600 billion to address the potential fallout from the European debt problem and today it says it will need only 2/3 of that. Correct me if I am wrong, but it seems to me that the IMF believes the problem is getting better, not worse. And how stupid is Japan, a country with its own economic woes, offering to give 15% of the fund total needs?
Japan said on Tuesday it will provide $60 billion in loans to the International Monetary Fund, becoming the first non-European nation to commit money to boost the fund’s financial firepower to contain the euro zone debt crisis.
Isn’t Japan listening to the really smart people who think Spain will need a bailout, no matter what? Mind you, if Spain does need a bailout, the $400 billion IMF fund ain’t going to cut it anyway, so it seems to me Japan, as well as any other country that contributes to that fund, is throwing its money down the drain, or those really smart people would have us believe as much.
And speaking of the IMF, the body charged with monitoring the economic health of the whole world, what’s up with its recent forecast upgrade for global growth in 2012?
The International Monetary Fund raised its global growth forecast for the first time in more than a year, with the U.S. boosting the outlook ….
Maybe the IMF is seeing what I am seeing, and maybe what the market is starting to believe – things are improving economically around the world, especially in the US.
Americans shrugged off high gasoline prices in March and spent more strongly than expected, suggesting economic growth in the first quarter was probably not as weak as many had feared.
Yes, the key to all of it is the American consumer, and the American consumer seems to be stepping up to do what needs to get done to revive the sluggish American economy. Even the real estate sector seems to be improving in key ways.
Groundbreaking on homes fell unexpectedly in March, but permits for future construction rose to their highest level in 3 1/2 years.
Just like Europe, the rest of the global players need time to get this all right, but it seems to me after three years of battling this and that, the players are now getting it right. What do you think?
Trade in the day – Invest in your life …
