The Euro-Crisis: Has the European Central Bank Woken Up at Last?!

A euro light sculpture at the European Central...Euro Sculpture at the ECB in FrankfurtImage via Wikipedia
With Standard & Poor's downgrading of the US debt, we got one step closer to global financial meltdown.

And of course, the weakest link in the system, i.e. the Euro-zone, got hit first.

With interests soaring last week on the Italian and Spanish bonds, the signals the markets were sending to our political leaders (if you can call them that) were crystal clear: After Greece, Portugal and Ireland, Spain and Italy are next!

Trouble is: no one can allow Italy (or even Spain for that matter) to go down the drain. That would make a $1.4 trillion hole, by some accounts. Whatever the size of the hole, it's obviously too big and makes the Lehman Brothers debacle look like a kiddy game, by comparison.

Let's be clear: it would mean the end of the world as we know it - and the Chinese, inter alia, are very, very worried. And so they should be. And so should we be all.

Sunday, the European Central Bank finally came out with a communiqué that left no doubt as to its intentions: it would buy Italian and Spanish bonds - in other words, it came out at last with a real, responsible position as central banker and defender of the Euro.

We'll see how the markets react this week. The proof is in the speculative pudding. But even speculators betting against the Euro are ultimately fools: they might (momentarily) make a lot of money, but they'll bring down the system and then where will they be?? Naked, of course.

The only problem in all this is that we shall be naked too!

Let's keep our fingers crossed!

Please let me know how you feel about this issue. This is something that has me very, very worried (like the Chinese!). But I'm hopeful that reason will somehow prevail in the end...
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