Markets

European equity indices have fared rather well of late, given that we are on the edge of the abyss. Facts on the ground: 5-year Portuguese debt offers a whopping 21% and German bunds just 1.8%. Uncertainty is everywhere and yet investors seem blind to it. Perhaps they are being intoxicated by the hallucinatory liquidity measures.

My rather complex theory is that people have gotten so used to the deep abyss being at their feet that it's simply become part of their mental furniture. What's that massive monster in the corner of the room, drooling and getting ready to pounce on us. Shouldn't we run for the hills? Oh, don't worry, that's just the monster. It doesn't do anything. Turn your chair so you can't see him. Look out of the window. Isn't it a nice day? I guess so, yes, wonderful.