When the Spanish bailout was announced last Sunday night, it was expected that this action would cause the markets to surge higher.
This belief was predicated on the idea that markets hate uncertainty. Well, if the markets uncertainty, why is this bailout reason to go on a stock buying spree?
The bailout does not solve Spain’s debt problem. All the bailout does, is buy Spain some time to formulate a plan to deal with its’ debt.
Since the market doesn’t know whether Spain can formulate such a plan, I can’t understand how these markets who hate uncertainty can see a bailout as a prudent reason to go crazy buying stocks, since we could be in the same position six months from now?
Sounds like the same short-sided, live for today attitude that nearly led us into a global financial collapse to me. Readers?