The Same Old New Ideas And Rumors Of Better Ones

Bloomberg reports that Chancellor Angela Merkel’s spokesman said that Spain knows where to look for aid if it’s needed, giving no ground to Prime Minister Mariano Rajoy’s pleas that Germany consider new ideas to resolve the debt crisis. 

Any idea what these new ideas are? Euro bonds. Otherwise known as more debt. Otherwise known as the very thing that got Europe into trouble.

Yet there seems to be building support for a European banking union. Merkel will discuss proposals on closer banking coordination later today in Brussels with European Commission President Jose Barroso. Merkel and Barroso will make a statement at 7 p.m. local time.

So it seems that Buy the Rumor, Sell the News could be in play here. S&P futures turned around from deep red last night to bright green this morning as if an agreement is forthcoming. Meanwhile the Germans continue to telegraph that any agreement would be "at the end of a long path." Therefore whatever rally that develops will likely be sold into at some point.

Buried deep within the Bloomberg story was this little nugget:

Struggling to shore up confidence in Spain’s banking industry, Rajoy used his weekend speech to urge euro-area nations to “cede more sovereignty” to a central fiscal authority and endorsed the European Commission’s call for a banking union that would entail a single regulator and a deposit-guarantee fund.

This quote, on the heels of Volcker's statement discussed here a few days ago, both of which conveniently coincide with this weekend's Bilderberg conference in Virginia, shows how the globalists are quietly turning crisis into opportunity. And for now, it may look like they'll get what they want. But there is still a single word that may stop them: ICELAND.

The bottom line is that there are no quick answers for Europe, only proposals and agendas that will take a long time to implement.  Hope is a very dangerous thing when dealing with financial markets.  It is quickly diffused -- and replaced -- by fear.

Last Friday I took some profits on my SH position (sold 1/3) at a truck stop near Pittsburgh, PA as tornado sirens were going off.  I was thinking about pressing on, but I had a feeling that I shouldn't.  It's a good thing.  Just 35 miles to the east, there was a tornado very close to I-70 -- the highway I was on.

European credit markets are closed today, so there could be a ramp up.  The first 38% level is 1293.50.  Why not.  Just remember that the futures probed 1262 last night.