I know I am a bit of a simpleton and perhaps rather naïve when it comes to democracy. I am such a huge believer in Democracy I tend to be blind to even subtle alternatives. Yannis Varoufakis, the Greek Finance Minister, who must clearly be looking to play Malvolio in the next production of the RSC’s “Twelfth Night” revealed the quite shocking and anti-Democratic skulduggery that took place during the last EU meeting. Firstly, they seem to despise Yannis’ intellect as he clearly grasps fundamental economics rather better than any other academic geek in Brussels – hence the rumoured demand that Mr Varoufakis be excluded from any further negotiations . It appears that the EU does not want any member state to ever allow their respective electorate to vote on the Euro. Brussels, as many of us have suspected or confirmed that the governing capital city of the EU is intoxicated by the fumes generated from Federalism and Dictatorship. The level of arrogance is breath-taking to behold.
Democracy in Europe is collapsing before our eyes and we are witnessing the birth of a new era – Economic Totalitarianism from political tyrants who are totally clueless beyond their own greed for power and money.
Hence we are in the midst of a temporary and totally unnecessary melt down of European markets. I suspect that we have not seen the end just the start of the beginning of what may be a very uncomfortable year. New York has yet to vent its spleen, though quite a strong message was sent out an hour ago that Global X FTSE GREECE ETF market in New York was scheduled to open – DOWN 15% – National Bank of Greece down 30%! We shall know our fate in an hour. The Greek stock exchange remains closed and is likely to remain so for the week. The Euro hit $1.10 and the 10-year Greek bond yield flirted with 14%. I suspect that when the bond market is fully functioning, barring a miracle, the yield on 10-year Greek paper may well be nearer 20% than where it is now.
At 12.34pm the FTSE 100 was down 121 at 6631 – -1.8%. Volumes were average considering the downbeat sentiment. Market makers were quoting ‘coach and four’ prices to avoid getting hit! Tui was damaged despite only average exposure to Tunisia and Greece. The market is concerned overall about holidays – down 8%, Thos Cook down by -3.5% and easyJet -1.5%.
Banks were not the flavour of the month – Barclays -2.5%, HSBC -1.5%, RBS -2%. Oils were easier by 2%, pharmas were down 1.5%, mining by 1.25%. Even defensive stocks such as BATS, IMPS, Severn Trent and United Utilities were in the red. The Pru was down 1.5% and Aviva lost 2%. The DAX and CAC were in far worse shape – down 3.3% and 3.5% respectively. However there was far greater concern over the SHANGHAI COMPOSITE which has lost 18% in the previous 10 trading days, lost a further 6% TODAY!