Greek Tragedy, Euro Falls

Sadly, I've been a little negligent with my blog the last week, but my friend Di insisted on more market blogs (and future non-market blogs to come). I'm currently working on a re-formatted options lesson, as requested by my other friend Wilson, and an article on RSP and TFSA's. Later or early next week, I will start to add investment basics for the beginner, along with my current daily market blog. It has been a few days since my last blog about Toyota, and so far, fears about the Japanese automaker seems to have disappeared with renewed concerns about European governments and their inability to finance their deficits, most notably Greece. According to a Bloomberg article posted on February 8, 2010, the Greek government has the largest budget shortfall in the European Union, and may need outsider aide. Concerns are also being extended to Portugal and Spain, resulting in rising credit default swap spreads. For those that do not know, a credit default swap is like an insurance policy against a government's debt. At last check, Portuguese swaps cost $244,060 to insure $10 million of debt for five years, up $20,000 over the weekend, reaching a new record for the country. Bank of America-Merrill Lynch analyst, Steve Pearsons, said that the Euro will continue to decline over the coming few years until the issues are resolved. Major currencies, especially the US Dollar, have advanced significantly against the Euro in the last ten days alone. He also claims the mounting problems will undermine commodity prices. Falling commodity prices are good for consumers, as costs of good will decrease, but could cause more economic problems for countries heavily invested in mining and drilling, such as Canada, Russia, Brazil, and many parts of Africa, which could offset any benefits for the average citizen, already being seen just days after the turmoil. Stressed countries have recently lowered wages, which has triggered massive strikes in Greece. The world is listening to these three countries with their ears to the door and worldwide stock markets have declined between five to ten per cent in the last two weeks. The theme of 2009 was "buy on dips (down days)", but 2010 seems to have reversed course quickly, with many to "sell on rallies (up days)." I've seen mixed reviews from analysts: Many believe this is a short-term correction that was anticipated in the early winter, others believe the 2009 rally was uncalled for and sees lows retested. Only time will tell. For anybody already invested in the market, I would suggest protecting your account. The costs of puts are a little high, but could be well worth it if the market falls for another few more weeks. Gains incurred on your puts would offset some of the drops in the value of your stocks. Consider writing calls for income as well.