In Spades

The European stock markets are up substantially this morning for two reason: one, the hope for a Greek debt settlement and two, the fact that the Shanghai stock market is up over 10% in the last two days ... both reasons being baloney juice. Whatever the Greek terms, it is clear that the vast majority of its debts will never be repaid and a capitulation by Germany and the EEC will now only encourage other debtor nations (Spain, Portugal, Italy) to swing left and emulate Greece in petulant defiance of their debt obligations.

And insofar as the much bigger issue, China, it is abundantly clear that the current Shanghai stock market is now a state-run artifice. The Beijing government has stepped into this "free market" with both feet ... decreeing that big investors not sell major investments for six months, threatening short sellers with prison, stopping trading on huge numbers of listed stocks, forbidding new IPOs, forcing banks and insurance companies to buy stocks, etc. ... see: The Economist Story. Such government manipulation of prices cannot bode well for the future of this trading venue ... and clearly is no reason for any bullish sentiment in the rest of the world.

Even that perennial bull, Jim Cramer, is chary about these developments and is offering constant veiled warnings about the state of the world's stock markets. I concur ... in spades.