On a recent visit to Europe I found little understanding of the seriousness of their predicament, that the ‘bottom’ is still some time away or any real concept of the paradigm shift that is needed for Europe to pull out of the mire within a reasonable time frame. Europe is in a daze.

I can sort of believe that the U.S. can somehow and to some extent re-engineer and reinvent itself at least one more time. But I sense that Europe hasn’t the foggiest idea of how they might do the same. You see more entrepreneurial flair in the back streets of Hanoi than you do in the financial centres of Europe.

A week ago I was chatting to a Greek guy in Spain and he cheekily said: “they should have known when they gave us the money they would never get it back." I didn’t know whether to laugh or cry.

Spain has an unemployment rate of 22%. No dramas - they are covered by social security. What I don't understand is how an almost defunct economy can fund this and keep its head above water.

There is little doubt that Asia - like it or not - is the engine room of the world. Try conducting a poll about social security in the main streets of Shanghai – even with your best Mandarin you will be hard-pressed to find anyone who understands what you are talking about. I am not suggesting China should be a social security benchmark. Far from it. But I am saying that no matter what we borrow and spend – personal, business or government - we must be able to repay it.

Christine Lagarde, the recently appointed IMF chief warned that the world could soon face another Great Depression and called for a $1 trillion resource to avoid this. She says that half should be sourced from Europe and half from the rest of the world - including you. It is altruistic to help our fellow man but I wonder if I am just going to be financing an on-going long lunch followed by a siesta in the sun.

We need to avoid recession if possible but when I look at the deficits of countries like Spain, Greece and Italy and the big creditors like Germany and France, I wonder whose pockets were lined by this excess spending. And should they not be paying some of this money back?

Anecdotally, fundamentally and technically I can't see this global village pulling out of recession for some time.

In this vein I have misgivings about the recent rally:

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A rising market and falling volume means a negative divergence, which is not good. The technicals and fundamentals are in agreement. This is a traders market and it is time for traders to make hay.

Enjoy the ride

Tom Scollon