{"id":2326,"date":"2010-11-18T07:50:45","date_gmt":"2010-11-18T14:50:45","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=2326"},"modified":"2018-08-17T09:02:41","modified_gmt":"2018-08-17T13:02:41","slug":"ire-of-ireland-way-overblown","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/11\/18\/ire-of-ireland-way-overblown\/","title":{"rendered":"Ire of Ireland way overblown"},"content":{"rendered":"

Yesterday saw another decline in worldwide equity markets.\u00a0 This bias toward selling is supposedly because of continued nervousness about Ireland’s finances.\u00a0 I discussed recently why I felt those concerns were unwarranted.\u00a0 I continue to think that they are way overblown.\u00a0 However, once traders, especially momentum folks, get\u00a0a hold\u00a0of a story they begin trading what they “expect” the news to be.\u00a0 So if they expect folks to respond negatively to news out of Ireland then they begin to sell.\u00a0 That selling momentum, in turn, leads to more selling by other momentum folks.\u00a0 That tsunami can get so intense that even sovereign nations are forced to do something about it.\u00a0 That is exactly what has happened today.<\/span><\/p>\n

Witness the following from Ireland’s central bank governor Patrick Honohan, who\u00a0also happens to be a governing council member of the European Central Bank:<\/span><\/p>\n

“Our efforts, the huge sums of money that have been put in by the government to support the banks, have not generated sufficient confidence yet.<\/span><\/p>\n

“The money is enough objectively but the confidence isn’t there and it’s partially not there because investors are concerned in general about the government finances and the future prospects for growth and employment.”<\/span><\/p>\n

What I want to zero-in on is his use of the word “objective.”\u00a0 As I said yesterday, objectively Ireland doesn’t needs these funds at all.\u00a0 But investors’ behavior is roiling financial markets worldwide.\u00a0 Those investors\u00a0are looking for acquiesence on the part of Ireland.\u00a0 Think of these momentum guys as being like a lynch mob – they will continue to riot until they get what they want, regardless of the logic or necessity of their actions.\u00a0 The nation of Ireland clearly understands the situation and they are going to take this loan on despite their accurate assessment and insistence that they don’t need the money.\u00a0 But look at how this is being done…<\/span><\/p>\n

“I think maybe the best way to think about this is that this is contingent funding.”\u00a0 The capital is probably not required at all, but it can be made available in the form of contingent capital funding that can be shown but not used.”<\/span><\/p>\n

That’s a statement that came late in Mr. Honohan’s interview with Irish state broadcaster RTE Radio.\u00a0 What he is saying is, “Alright, if you insist.\u00a0 We will agree that if we need the money we will take it on.”\u00a0 In other words, the real effect, like so much of what is going on in the world of finance right now, is psychological.<\/span><\/p>\n

And that is the real<\/strong> story here.\u00a0 Investors are more focused on their fears than on reality.\u00a0 This tenuous situation is wrought from a global\u00a0economy and financial markets that aren’t responding in accord with how the current generation of traders and investors have come to expect them to behave.\u00a0 So these fish are out of their waters and that makes them nervous.\u00a0 For me, this is an opportunity.\u00a0 When the majority of people buying and selling stocks are prompted to do so by their emotions, it means that selling mistakes are made, and bargains can be had.<\/span><\/p>\n

My prediction is that little or no money will ever be drawn from this “loan” by the Irish.<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Yesterday saw another decline in worldwide equity markets.\u00a0 This bias toward selling is supposedly because of continued nervousness about Ireland’s finances.\u00a0 I discussed recently why I felt those concerns were unwarranted.\u00a0 I continue to think that they are way overblown.\u00a0 However, once traders, especially momentum folks, get\u00a0a hold\u00a0of a story they begin trading what they […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2326","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2326","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=2326"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2326\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=2326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=2326"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=2326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}