McAlvany Wealth Management | McAlvany Weekly Recap: The monetary “fixes” the EU, Fed, or any other governmental body is likely to conjure up at this point will possess only the appearance of permanency. In reality, all are to some degree inflationary and therefore temporary in effect. In our opinion, this particular deal may increase current inflation marginally, and has even less potential to stimulate economic growth among those participating (Italian debt markets fell the very next day).
Instead, as we said a few weeks ago, this is a deal that is meant to restructure/aid the banks. Put simply, the banks in question are being given the chance to refinance their own debt by assuming the cheaper EFSF facility. As a result, we doubt that the retail environment and, by extension, the economies at large will experience much relief from the deal. Merkel herself was quoted as saying, “this money will never be needed because the mere pledge will restore market confidence.” We shall see…
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