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Europe On The Ropes: Financial Punches Fly
The markets are signaling that political approval for bailout is in jeopardy, says EWI's European editor.

By Bob Stokes
Thu, 06 May 2010 14:30:00 ET
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European stock markets are down again, the euro is down BIG (falling to as low as $1.26 for the first time in over a year) and Moody's is likely to downgrade Portugal's credit rating. And now -- the Greece debt crisis has turned deadly: 

"Tens of thousands of people took to the streets....to protest new taxes and government spending cuts...three bank workers...died after demonstrators set their bank on fire...." -- May 5, Associated Press.
Says Greece's Finance Minister Papaconstantinou: "There's a very strong current of feeling among the population, that we should put some people in jail, that we should go after those lawyers and doctors who don't pay taxes, go after corrupt politicians." (The Financial Times.)
The International Monetary Fund is still slated to offer Greece assistance, but will it be enough? Can Greece count on help from European neighbors?
You can try and answer that question using Elliott wave analysis. The Wave Principle teaches that the stock market reflects a society's prevailing mass psychology -- or social mood. As EWI's president Robert Prechter puts it in his classic 1985 report "Popular Culture and the Stock Market," "A decline indicates an increasing 'negative' mood on balance, and an advance indicates an increasing 'positive' mood on balance."
Well, here's the latest from the editor of EWI's Monday-Wednesday-Friday European Short Term Update Chris Carolan:
"...the markets are signaling that political approval of the bailout from all necessary parliaments is in jeopardy...the spreading riots in Greece do not help that country's efforts to gain funding."
German Chancellor Angela Merkel voiced concern as she talked to German lawmakers about the Greece bailout plan, "We're at a fork in the road...This is about nothing less than the future of Europe, and with it the future of Germany in Europe."
But there are even weaker European stock markets than Germany's right now. In the May 5 European Short Term Update, Chris Carolan gives you a list of European countries "we think have the best bearish potential." At least one of these countries is a major European economy.
You also get an insight into Europe's equity markets overall -- in the May 5 ESTU Chris tells you whether equities are likely to make another push higher - or if this is "it." 

Click here for EWI's latest thinking about Europe's rapid financial changes.

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