WASHINGTON, July 24, 2012 – Not much to write about this morning, really. Averages tanked yesterday due to a variety of negative influences including disappointing earnings from Mickey D’s (MCD), more fiscal acid rain in Spain, the current Greek government’s refusal to get serious about their obligations, and confusing economic reports from the People’s Republic of China whose Chicom-vetted numbers are always suspect anyway, making the world’s second-biggest economy a continuing, nerve jangling cipher to investors and analysts.
So it’s not surprising that we had a bad day yesterday as we’d predicted. But things did come skittering back a bit near the close—no doubt bulls looking for deals and maybe some ETFs squaring up end-of-day positions, as they must.
Although temporarily under the radar, the situation in Greece is most troubling. According to a guest post at Zero Hedge by the amusingly named “testosteronepit,” the Greek government is hosting the mostly Euro-bigwigs—representing the European Union (EU), the European Central Bank (ECB), and the International Monetary Fund (IMF)—who are supposed to give that hapless nation another tranche of Euro-moolah:
“Inspectors of the Troika—the EU, the ECB, and the IMF—are trundling into Athens today [July 23] for meetings and inspections starting on Tuesday [July 24]. Their final report will be the basis for the Troika’s decision in September to make the next bailout payment, or to let go. Politicians appear to be holding off on their final judgment until then. But they’re talking—and it doesn’t look good for Greece. Its demands to renegotiate the agreed-upon reform measures and then to delay their implementation has hit a wall of resistance.”
In other words, the current Greek government wants to reset the clock so everything will be just hunky-dory again until the next time. The only mystery here is just who is building a 21st century Trojan Horse: the Greeks (who built the last one), or the so-called Troika?
The Greek version of the horse today would be filled with Greek government bureaucrats and private sector kleptocrats bent on robbing Eurogovernments—particularly Germany—into submission, the better to fund for a few years longer the out-of-control socialism most Greeks seem to prefer. The Troika version of the horse would be loaded with scowling Euro-accountants and actuaries armed with a phalanx of laptops. Their mission: to turn the Greeks into Euro-slaves ‘til the end of time. (Or at least until the last month of this year when the ancient Mayans said it will all be over anyway.)
Some choice. But think of this: lest some of our commentators think we’re singling out the Greeks for particular abuse, try this thought: our own Obamanation is headed in the same direction. Soon, less than 50% of Americans will actually be paying taxes. When non-taxpayers exceed, say, 51%, we’ll be on the same slippery slope the Europeans, and particularly the Greeks, the Spanish, and the Italians, have already invented and proved unworkable. When enough voters don’t pay taxes, they’ll happily support whichever party promises to provide them with the most free goodies, since they’ll never have to pay for them anyway. The hapless remaining taxpayers will.
Ergo, in this scenario, whose endgame is now playing out in Europe first, there really is a free lunch after all. Problem is, like a house of cards, it’ll all come tumbling down in the end, just like it is in Greece right now. We can learn the lesson and act on it this November, or not.
All this, including minor matters like the “fiscal cliff” of massive January 1 tax increases, is hanging heavier and heavier on the market this summer. Add in the Syrian mess and Iran’s murderous meddling nearly everywhere, throw in the “Dark Knight” massacre, and—just for fun—throw in the possibility of a terrorist incident during the current London Olympics, and you have a market with a continuing bearish bias.
While we should open down this morning, there might be some kind of relief rally if traders (read insiders) get a whiff of a good number from Apple sometime today before they report. That stalwart stock has the potential to reverse the NASDAQ back into an upward trajectory. Or not. Numbers could be slightly “weaker than expected” due to iPhone sales possibly trailing off as users anticipate a new iPhone 5 this fall and hold off on purchases. (The Maven happens to be one of them, still limping along with his old Motorola RAZR with the nearly dead battery.)
Otherwise, 2012 is looking a lot like 2011 with its negative, meat-grinder summer swoon and its surprise autumn pickup. As for this year’s potential pickup, however, we’ll just have to wait and see about that fiscal cliff which might still threaten even if Romney should pull out a win. Dems are sore losers.
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