Wednesday, November 24, 2010

European Debts Eating Away At Global Stability

It would take a lot to sink the MSCI EAFE Index.  Markets in Europe, the Far East, and Australasia would have to decline in tandem.  That's the great thing about investing with an index covering multiple parts of the world that are too far removed from a U.S. investor's locale.

One of that stool's three legs is being eaten by termites.  Europe's PIIGS are once again making news:

Anger and fear about Europe's seemingly unstoppable debt crisis coursed through the continent Wednesday. Striking workers shut down much of Portugal, Ireland proposed its deepest budget cuts in history and seething Italian and British students clashed with police over education cuts.

I guess "Old Europe" is getting some more grey hair with all of this stress. Speaking of stress, didn't Europe apply stress tests to its own banks recently?  Yeah, those worked out just fine.  They were designed to hide problems instead of reveal them, just as their counterpart tests in America did. 
Full disclosure:  My short puts under EFA might get triggered next month after all, if European contagion spreads to Asia.