Periods throughout history that have been defined by economic upheaval have been fraught with deepening chaos in the marketplace. Financial crises, such as the ones currently plagueing economies worldwide, have been triggered, in large part, by unresolved outcomes from negative events affecting regional economies. This lack of resolution leads to economies that are initally unaffected or only slightly affected by these risks, to speculate about the solvency of their trading partners. Increased risk, whether real or percieved worsens the scenario by creating even greater economic imbalance.
The most recent such trigger threatening interconnected global markets is the debt crisis shrouding the soveriegn states of Europe. In this situation uncertainty prevails, because no one really knows who will take the fall from Greece’s fiscal meltdown. Many see the contagion adversely affecting the world economy as a single spreading infection. Others believe that the fiscally weakened countries of the European Union, like Greece and Ireland will bring down the stronger ones, such as Germany and France.
Whatever the mode by which the pestilence spreads, one thing is certain. Someone will need to bear great loss in order to set the financial system right. No one is happy with the prospect of sharing the burden by the printing of currency and its subsequent infaltionary result, but few other options seem emminent.
Dizzying point drops in US stock indices are already signaling extreme shifts in assets and liabilities on a worldwide scale. Those who take diversified portfolio positions that include physical stores of precious metals, will not be surprised by drastic market movement when others are racing to the exits to preserve other forms of capital.
1 Response to Erratic Activity In US Stock Market Triggered By Increasing Global Uncertainty