Nobody is buying European Central Bank President Jean-Claude Trichets assertions about Eurozone financial stability.
Despite his panicky reminder that the total Eurozone’s 2010 budget deficits will only be 6% of GDP, far less than Japan and America who are expected to have deficits in excess of 10% of GDP, markets collapsed overnight.
European stock indices are down around a per cent each while higher beta Asian markets have slumped 2 – 3% following yesterday’s U.S. market rout.
Commodities are falling and gold looks about ready to break down through $1,050. The Euro is now only worth $1.37, its lowest level in eight months. U.S. treasuries and the U.S. dollar have firmed, as have many developed nation currencies outside of the U.S., U.K., and Europe.
Problem is Mr. Trichet, markets aren’t worried about what current financial projections say about the Eurozone, they’re concerned about what your financial projections will say once they are potentially revised downward should financially weak European nations sink deeper into financial crisis.