Happy Monday today? Well it is for anyone who needs a loan in Europe!
"US STOCKS-Wall St set to soar on euro-zone rescue plan."
"NEW YORK, May 10 (Reuters) - U.S. stocks were poised to jump about 4 percent at the open on Monday after a $1 trillion global emergency rescue package was launched, quelling contagion fears and sending European stocks surging."
Looking at http://www.kitco.com/ , they are spot on. The Dow is up 434 points, that's 4%!
"DJIA 10,814.84 +434.41" 10:08 NY time, quote delayed 30 minutes.
The article says:
"The rescue package pledged 500 billion euros ($670 billion) in loans and loan guarantees to euro-zone countries, plus about 250 billion euros from the International Monetary Fund. The package is on the same scale as the $700 billion bailout launched by the United States to stave off the credit crisis."
I thought that Greece needed about 30 billion euros originally and that ballooned to 100 billion in recent weeks. Now the package (including other countries) is 500 billion!
It goes on:
"...the European Central Bank said it would buy government debt to steady investor nerves. A number of European central banks said they had already started."
That sounds like Quantitative Easing to me, printing money. QE to infinity as Jim Sinclair has recently predicted as being inevitable.
Doesn;' this mean the end of the euro as a sound currency. It's no longer a hedge against the dollar, just another banana republic style set of pieces of pretty coloured paper. The Germans will be delighted that's for sure. Good for their exports with a weak euro but another big inflation to come to go with the one in the 1920s. The German thrift has bailed out mediterranean recklessness as Bob Hoye has said.
Gold of course has gone down a bit, but not much. It will fade as the safety trade for a little while but has the potential to come in instead as the big inflation trade because none of these currencies can even pretend in the slightest to be sound money now!