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Today I read a quote from Portugal’s President Silva:

“The European Central  Bank can stop the spread of the continent’s financial crisis with foreseeable and unlimited purchases of Italian and other government bonds.”

Really? Gosh if its that simple and they can do that so assuredly then why didn’t they come up with this bright idea oh say… 6 months ago or a year ago when things aren’t as blown-up as they are today.

I’m not saying they can’t have any effect. Hey, it got at least a “one day rise” out of EUR/USD which could be fizzling even as I’m writing this.

But I believe a crisis is a crisis because they couldn’t prevent it. Now it’s blown into a contagion, spreading here to the U.S. If they could stop a contagion then there would never b contagions.

Could the U.S. and Bernake stop our last crisis? No. The Dow still fell from the 14,000′s down to the 6,000′s. Now you think if they could have prevented that they would have? Sure!

So its never as easy as these guys make it out to be. Of course they want to project confidence in what the ECB can do. If they can help to influence investor sentiment for the positive, of course that helps. So I can understand why they talk like they do.

However, its just never that cut and dried. It will take a bit longer for all of this to play out no matter what types of engineering they try to do to the system now.

That’s why I expect EUR/USD’s downtrend on the daily chart to continue even though there will be “bear market rallies” along the way like we’ve seen today.

Sean Hyman
My E-Book
info@worldcurrencywatch.com
Editor, Currency Cross Trader

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