Via Mark E. Grant, author of Out of the Box,
Magic Mirror: Snow White still lives, fairest in the land. 'Tis the heart of a pig you hold in your hand.
Queen: The heart of a pig! Then I've been tricked!
You know how when you were a little kid and you believed in fairy tales, that fantasy of what your life would be; a shimmering white dress, a Prince Charming who would carry you away to his castle on a hill. You would lie in bed at night and close your eyes and you had complete and utter faith in God, country and Superman. Santa Claus, the Tooth Fairy, the quest for the Grail, the Easter Bunny were so close you could taste them, but eventually you grow up, one day you open your eyes and the fairy tale disappears.
Sneezy: Hey, someone stole our dishes!
Most people, most markets, operate on the basis of reality and probable scenarios based upon fact. This is not true for the equity markets however as it is here where hopes and prayers and visions of Tinkerbell and little blue fairies that will come to the rescue reside. It is in the stock markets where great dreams take place and where Batman guards Metropolis. It is also here, however, where eyes tightly closed are pried open from time-to-time and where the horrors of the known universe stare back at you with disquieting eyes.
Sleepy: Maybe the Old Queen has got Snow White.
Thursday and Friday of last week, I should imagine, will prove to be those once again days where the flight of fantasy took off and hoped for the best only to find that the fuel in the tanks was dangerously low. Treasuries moved some, not much, the bonds of Spain and Italy gained a bit of ground while the stock markets soared on the basis that all of Europe’s problems had been solved by Draghi & Company. Interestingly enough, after the close of course which is the way these schemes are pre-arranged, the German Central bank came out and said there were no changes in their stance and so the cold water was poured upon the fire after all of the party-goers had gone home. Just this morning in Berlin the German Finance Minister declared that the Stabilization Fund that is currently in existence, the EFSF, will not be buying Spanish debt in the market which topples the dreams and fantasies of last week.
Magic Mirror: Prepare to be amazed beyond all expectations. After all it is what I do.
Draghi represents the Southern contingency, the periphery nations, the troubled cousins who cannot live on what they make. This is all fine and dandy but do not kid yourself; if the Germans say “Nein” then it is “Nein” and any other conclusion is foolhardy. We will soon get the German opinion on Greece, the money for the Spanish banks is going to the nation of Spain and will be controlled by the German auditors, Italy is staring at mounting difficulties, Portugal is going to face an Act II and there is only $65 billion left in the EFSF fund while the ESM fund is hung up in the German courts until September 12 and today is July 28.
Whoosh and sorry for the dose of reality.
Snow White: That was fun!