Plunge

First off, I need to recap where the market has been in the few weeks leading up to today. As I already know, Greece entered the European Union under false pretenses of fiscal solvency. They had used an enormous derivative as a multi-billion dollar loan to bring their current accounts into line with the EU requirements for membership. Greek governments probably took full advantage of EU membership for borrowing, leveraging, and investing, but it was all based on the lie of solvency. A large percentage of the population are thought to be evading taxes, and the government was lax on enforcement. A virtuous(?) new government discovered these fundamental flaws and disclosed them, but hard times had already fallen. Multiple loans, bond issuances, debt restructurings, and unpopular "austerity measures" later, a well-intentioned government fell to increasingly popular opposition. The resulting election favored many fringe groups that rejected austerity, despite the fact that Greek debt is approximately 159% of GDP. Beginning approximately May 2, 2012, the previously elected parties were brutally punished at the polls, and fringe groups who variously opposed austerity were elected. In several attempts at negotiation, these groups subsequently failed to find enough common ground to form a coalition government, and world markets began a marked decline that lasted through Friday, May 18, 2012.

Hi, my name is Karl, and I use the handle "KarlMonster" for a number of things. I began to use that when two different friends - who did not know each other - used that term to address me. I figured that they must know something that I didn't. ... Right?

I've spent some time trading currencies, and I've listened to a number of strategy sessions touting Fibonacci levels, support and resistance levels, trend lines, "head and shoulders" formations, etc, etc, etc. And I don't believe a word of it.

"This "head and shoulders" formation should lead us to look for a support level down here."

"OK... but what caused the "head and shoulders" to form?"

"What? Uh... well, changing market prices and resultant volatility for one."

"And bad news, like government policies, economic reports, and earning results."

"Well, yes, but..."

"What if the news was different? Then there wouldn't be this "head and shoulders" pattern, would there?"

Since I reject the value of such "indicators", I seek to understand the market through more rational means, such as observing geopolitical events, and recording them here for future reference by myself, and whomever else might be reading. Today's market performance was interesting enough to motivate this blog, and I want to record my observations while they are still fresh in my mind. Also because I need to offload the information to somewhere, much like my other writing. Much like my other offerings, this blog may suffer from limited updates depending on where my attention is at the time.