Sovereign Debt Crisis Not Going Away
Today S&P downgraded Greece & Portugal which sent the U.S. stock market down over 100 points. Anyone who follows economic news already knew that the situations in these European countries is not good. So it is interesting to see the market react in a big way to news that most people expected. This is a statement on how markets work. When a market is up 70%, people get used to buying high and selling higher. They also get used to the market shaking off bad news.
As this game unfolds, expect the market to get shaken up when big news like today’s downgrades gets released. The market will probably continue to be “resilient” and move higher despite these massive, massive issues in the global economy. It will move higher of course, until it doesn’t. And when it doesn’t, it will be ugly.
Well, the sovereign debt crisis is just getting started. Many European countries are going to have major funding issues and Greece is just the first. There is a good chance that the Euro collapses over the next couple years. As the dominos fall in this game, the end game of course is the United States.
Will the United States have a debt crisis? Possibly.
The crisis unfolding over sovereign debt is the number one reason to own gold. If you missed reason #147,231, click here.