Simon English: What will happen in the eurozone? Don't ask the experts, they don't have a clue

Outlook Shares were up yesterday, theoretically on hope that the eurozone "crisis" will be resolved. If they are down again today (that's the way to bet) does that mean we are suddenly back in the mire?

Not really. One thing that happens when economic news gets interesting enough to bother the front pages is that all sorts of unlikely people, TV presenters for example, suddenly claim to care about the machinations of this curiosity called markets.

If they've fallen there must be a good reason why – we shall tell people what that reason is.

Sometimes markets are moved by genuine shifts in sentiment or genuine moves in perception of what the future holds, but it is hard to see that's the case lately. They are moving on noise and, moreover, on extremely low trading volumes.

The eurozone situation is so hard to call that traders, fund managers, bankers, economists and the whole rest of the chasing pack of folk pretending they know what's going on from one day to the next are left floundering even more than usual.

They might like to say "search me, I've no clue", but that could prove to be a seriously career limiting stance.

Instead, they react to newsflow, rather than relying on the considered analysis on which their jobs are supposedly based.

That daily tension between greed and fear has always been present and trading on what one thinks will be in the news is far from a fresh approach, but the trend is lately exacerbated since the possibilities are so far apart (either we're all doomed to the Third World War, or we're heading to the end of the banking crisis and a fresh boom in prosperity).

So much so that Matthew Lynn of Strategy Economics argued the following in a paper yesterday: "Conventional economics is now largely useless in trying to analyse the twists and turns of the unfolding euro crisis: it has long since left behind any rational calculation of what is good and bad for the Continent."

If he is right, most economists should pretty much just resign.

By Mr Lynn's telling, the present situation is best understood as a branch of game theory.

"The markets take the euro-zone to the brink of collapse. Asset prices plunge.

"As they peer over the edge of the abyss, the leaders... take fright and come up with whatever is necessary to keep the system from collapsing," he writes.

This has happened several times already and will keep happening, goes the theory.

He thinks this game of chicken is a trading opportunity, and suggests buying blue-chip European stocks, French bonds, German property, gold and the Russian stock market. They'll all go up after the Greek elections and the next big rescue deal, he says, at least for a while.

Even if you aren't in the mood to take such risks, his analysis might be a source of comfort.

His wider point seems to be that, since it is in no one's interests for an entire continent to go bust, they shall keep figuring out a deal to prevent such a calamity.

Mr Lynn thinks that none of the bailouts can work in the long-term, but he might concede that until tomorrow comes (it never has yet) we can all live forever, one day at a time.

In the short-term, there are money-making opportunities for those who ignore the gloomy chat.

So don't look too closely at the stock market. Its daily gyrations really aren't telling you anything that helpful.

s.english@independent.co.uk

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
News
Danczuk has claimed he is a 'man of the world'
news
Sport
Seth Rollins cashes in his Money in the Bank contract to win the WWE World Heavyweight Championship
WWERollins wins the WWE World Heavyweight title in one of the greatest WrestleMania's ever seen
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor