Europe is already tanking. For example, the German market is down almost 6% today. The Spanish market is down almost an incredible 9% . . . not bad for one day!
Last week, the leaders of Europe finally completed their Herculean effort to save Greece. The world stock markets started to heal. Then, Greece did the unimaginable. They decided to hold a referendum IN A FEW MONTHS to decide whether to accept the aid or not. Apparently, support for the ever-increasing austerity program is virtually non-existent, and the Greek politicians were afraid to proceed without some popular support.
Germany never held a vote to ditch the Mark and to hitch their wagon to the Euro. Neither did France or the other nations of the European Union. Voting on complex financial matters is something few voters are equipped to evaluate. This is the outer limit of democracy.
I was relieved last week but expected there would be a few bumps before we understood the template approved last week and expected the market to be down the early part of this week. But, nobody imagined the Greeks would refuse a handout. It must be the first handout they ever refused. I’m glad I had not made any changes yet!
Adding to the panic is that the MF Global bankruptcy produced a very ugly surprise, i.e., there may have been commingling of client funds and some may be missing. The firm’s CEO was one of the most respected men on Wall Street. First, it reminded everybody of Lehman. Next, it reminded everybody of Madoff. That’s just too many bad memories for one day!
So, hold on . . . it will be scary today!