Remember the Upside of Market Fear
Beware of things that are important until they are not. Last year at this time, we were gripped with the possibility of major defaults on sovereign debt. We were concerned that Spain and Italy, gigantic bond markets, couldn't pay their bills. Every day we would come in and be victimized by the ever-increasing borrowing costs. We knew they had the ability to bring down the whole world with their profligacy and their insistence on not raising taxes to pay for their social welfare states.
Turns out that at that very moment that we were saying they could bring the whole world down, we should have been buying them. It was a once-in-a-lifetime opportunity that came and went because the fears far outran the risks. The Europeans offered sensible plans. Responsible governments stepped up to increase taxes and cut benefits -- see, Washington, it can be done -- while at the same time the European Central Bank was able to forge a compromise that backstopped the banks. Many raised debt, too....387 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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