Tomorrow is Saturday and the financial markets will be closed for the weekend. Therefore the question posed in the title of this week’s contribution is not so much about tomorrow, but what will be happening in the coming days in the financial markets and how this will impact the real economy.

...speculators are managing to make a daily killing while investors and savers keep on getting the proverbial wrong end of the stick.- Lawrence Zammit

The question is pertinent, we have become so accustomed to the volatility of the financial markets that the news emerging after a day’s trading no longer seems to shock us.

And this is wrong because the speculators are managing to make a daily killing while investors and savers keep on getting the proverbial wrong end of the stick.

Politicians keep discussing possible solutions, either in international forums such as the EU or the IMF or some other grouping, or within their own national governments. Some governments such as the United States and the United Kingdom are giving the impression their house is in order, but the eurozone still has not got its act right.

Then we get the news that the US government has no clue how to create more jobs or where it is going to get the money to stimulate employment.

Admittedly, even within the EU, there still does not seem to be a solution in sight, as discussions go from Eurobonds to harmonised fiscal policies.

At times we are given the impression that a long-term solution has been found, only to realise a couple of days later that it was just talk to quieten the financial markets.

Thus, no wonder no one seems to have an inkling of what is going to happen tomorrow.

The media are after the sensational scoop and so we very rarely get to know what the situation really is.

And within a scenario where no one knows what tomorrow will bring, the speculators keep putting pressure on bonds, equities and currencies.

This situation has led some people to claim that the market is always right and that it is useless for governments to seek to beat the market, as they have been doing for the last three to four years.

I believe that markets are not always right and this is why they should be regulated.

What is evidently happening today is that large operators in the financial markets are exploiting fully the weaknesses of governments and through their bullying tactics, are imposing their will.

However, just because these operators are big and can get their way, it does not mean that they are right.

Moreover, no one seems to have told the full truth about the level of exposures to the various currencies, sovereign bonds and equities.

For example, when reading annual reports of fund companies, one would not find any mention of exposures to the sovereign bonds of the Greek, Italian, Spanish or Irish governments.

Neither would you find mention of other risks. You would find names of reputable institutions and companies.

On the other hand, how sure are we that these reputable financial institutions and companies are not in their turn exposed to risks?

This is why we can still expect some surprises and why one can never claim with certainty who is immune and who is not immune to a default anywhere in the world. Hence the question I pose today.

All this may seem strange to us. Last week I commented about the normality of the Budget presented in Parliament by Minister Tonio Fenech.

There were those who expressed diverse views on the Budget, some positive and some negative.

I believe that even these comments enter into the sphere of normality, as they all have their merit. We know there is uncertainty beyond our shores, but at times we may feel insulated from such uncertainty.

Anecdotal evidence is also suggesting that we are actively seeking such insulation through the repatriation of funds from abroad.

The decision whether to issue Eurobonds or not is a decision that will affect us. It requires a deeper assessment than a couple of sentences.

Eurobonds may address some of the short-term uncertainty that financial markets are facing today, but they will not address the long-term fundamental issues. They may buy time but not solutions.

So we should seek that the eventual decision goes in the direction of Malta’s interests. In the meantime we have to remember that economies operate on a 24/7 basis and never go to sleep.

This is why we need to think of solutions for tomorrow’s problems, even if we have no idea what will be happening tomorrow.