Thus the Financial Times today, the first day of yet another two-day European summit. The shares went up yesterday on the hope that the summit would finally settle the eurozone troubles. The title of the article thus stuns. Can the vaunted investors indeed be so stupid? Also, can they indeed be so fickle? It should have long been clear to them that the summit would end up in yet another stalemate and yet another postponement of all key decisions. No other option is available, either. Also, it should have long been clear to them that caution is hardly an appropriate response to the eurozone troubles. Instead, they should shiver with fear. In fact, they should panic. And they should remain in this state of mind for at least five years, or perhaps even ten, over which period the shares will keep slipping. Forever an optimist, though, I would like to add that even depressions eventually end.

Addendum (June 29, 2012)

But the Financial Times is upbeat today: “Risk Assets Surge on EU Summit Deal.” Indeed, the European Union leaders agreed on a bailout fund to be used directly to help banks, especially in Spain and Italy. In addition, they agreed on a single supervisor of the banking system, thus paving the way toward a banking union. The euro has consequently rallied more than one percent as Spanish and Italian government bonds slide. So, was I wrong yesterday? Far from it. The Union leaders now need to get their parliaments to agree on the reforms. To be sure, this will not be an easy job in the countries buttressing the bailout, and especially Germany. On top of that, a banking union is a far cry from all the reforms that would be needed to form a proper fiscal union, and such a union would perforce be coming very close to a political union. But getting the parliaments of all the countries involved to agree on comprehensive reforms of this ilk is nigh impossible, for national sovereignty is ultimately in question. In short, today’s euphoria cannot last more than a few days.