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European Deposit Guarantees Needed to Save Economy and Stock Market
Pinnacle Digest writes: In Chris Ciovacco’s latest article he addresses the mounting problems in Europe that have sucked the life out of the market.
Spain is now coming to the ECB and other European groups with a hat in hand asking to help recapitalize its banks. However, Spain is looking for the handout with limited strings attached, in fear of turning into the next Greece. Unfortunately that just isn’t a realistic option as Germany, led by Angela Merkel, is very concerned about helping Spain without having a say in how the money is used and what preventative measures will be put in place to prevent this from happening again.
While Spain is attempting to tap the euro region’s permanent rescue fund, in order to bypass the political red tape, it likely won't get any financial assistance without the German ‘ok’.
Germany has stated it would like to put the largest banks in the euro zone under direct European supervision to prevent catastrophes and irresponsible lending, but it would come at a cost of countries losing a part of their sovereignty.
Despite Germany throwing ideas around on how to fix the growing debt problems in Europe, they have yet to support a Europe-wide depository insurance organization - something we in the west have had since the Great Depression. This is a measure needed to be taken in Europe in order to prevent a possible run on the banks.
The Wall Street Journal has stated that while Germany has put forth some good ideas, none of the plans would help the near-term issues and would take a couple years to implement. As we all know, the euro crisis could be days away from blowing up.
Click here to read Ciovacco’s article on how all of this has influenced the market and what roadblocks are ahead according to the technicals.