Art Cashin, the skeptical floor veteran, and always practical and easy-spoken observer of market moves and developments, shares his latest set of views on the happenings in Europe. Granted this is backward looking, as things in Europe change from one total mess to another in minutes, but still a good summary for new entrants into the utter chaos that is a EUR-driven market with 1.000 correlation to the European currency.
Political Posturing And Postponing On Two Continents - Tank Stocks - The European crisis appeared to spread to Italy as bond yields and CDS spreads virtually exploded. While Italian paper and Italian banks came under severe pressure, their problems may be as much related to politics as it is to any problems of liquidity or solvency.
There are concerns that the Italian government may be becoming more dysfunctional than normal just as a financial crisis threatens A key problem seems to be an increasingly acrimonious relationship between Premier Berlusconi and Finance Minister, Giulio Tremonti. Berlusconi recently said of Tremonti - “He’s not a team player, and thinks he’s a genius and that everybody else is a cretin”.
Tremonti is under severe press attacks for being the house guest of a close ally who was recently arrested on corruption charges.
Tremonti seems to think he’s too important to fail. He’s quoted as saying, “If I fall, then Italy falls. If Italy falls, then so falls the Euro. It is a chain”. Not very calming to markets.
The Italian mess and more political grandstanding in Washington had stocks open sharply lower and stay there all day. They never got to one knee for the mandatory eight count. The only saving grace in the carnage was that the S&P held exactly at its 50 day moving average (DMA).
Playing For Time In Europe - Watching the Kabuki dance staged by European leaders as the sovereign debt crisis turns worse daily, I am reminded of an anecdote about a disciple of the philosopher Heraclitus. Here’s my version of the anecdote from December 2002:
Let me try to walk through the concept another way. It concerns a fable about a disciple of Heraclitus.
Heraclitus, as you recall from sixth grade, was a Greek philosopher in the fifth or sixth century B.C. (okay, so my memory is a touch inexact). Heraclitus in his own way was the father of chaos theory. He said you could never step in the same river twice, since the water you first stepped in was swept away and the next step was into new and different water. He likened reality to a flame. It looks the same in form but is ever changing.
Anyway, this disciple of Heraclitus (whose name I've forgotten) was condemned to death for his teachings. He begged for his life and promised that if death were postponed, he would teach the king's horse how to fly within a year.
The king, naturally fascinated, complied.
A friend of the prisoner admonished him for conduct unbecoming of a philosopher. Why postpone the inevitable? Die with grace.
The ex-prisoner replied that before there was but one possibility. He would be executed. Now there were four possibilities. Within the year - the king could die - I could die - the horse could die.....or I could teach the damn horse to fly.
Like the disciple of Heraclitus, leadership in Euroland cannot find a solution and appears to be trying only to buy time and hoping horses learn to fly.
h/t London Dude Trader