Will European Bailout Crush Companies with Large Exposure There?

The announcement that the European Union would be offering just under $1 trillion to support and/or bailout the irresponsible countries in the region, has many people wondering how much damage that may end up doing to companies with a large presence there, as austerity measures are sure to lower demand for a number of products and services in the euro-zone nations.

Add to this the reality that China will be cutting back on some of their spending, and there is a lot of pressure out there on how all of this will affect demand for raw materials as well, with so many nations counting on China as the source of their growth.

Strangely, Wall Street also shrugged off the report from the Commerce Department, showing inflation is rising as wholesale prices increased by a hefty 2.4 percent, while inventories also rose by 0.4 percent in March, signifying slowing sales.

The irresponsible financial media focused on the meaningless rise in the DJIA, and couple of companies like Intel (NASDAQ:INTC) and Gilead Sciences (NASDAQ:GILD) who in the case of Intel gave some positive guidance, and with Gilead that they were buying back their shares.

How this counters the extraordinary events which will have a strong and negative impact on business going forward is beyond me.

So you have inflation in China and the U.S., China and Europe taking measures which will cut back on spending, and that seems to be irrelevant to many who are making it look like we're doing business as usual and we're in an economic recovery. It's bizarre and dangerous to take that mentality as being legitimate.

There are hard times ahead, and it'll probably last for years, as the European Union countries could end up struggling for up to 15 years if we can us Germany as a metric, as it took them that long to change to a more market economy, and the conditions and entitlement culture in these other countries seem worse than Germany was when they instituted their changes.

With China and Europe about to cut spending, it's hard to see what it is people see that gives them all the unwarranted optimism. Positive thinking can't change the fundamentals which threaten to bring the global economy back into what could be a much-worse recession than we are trying to emerge out of.