We all know that news headlines are there to catch our attention. We know that they simply cannot possibly convey all of the minutae and context of what is actually going on in any given event. However, in a time deprived world the news headlines are often all that we get to see or notice. That’s a pity because it can lead to a great deal of misinformation, which ultimately impacts on our ability to make valid decisions.

Headlines on the ‘Greek Debt’ issue

In the period since April 11, we have all watched global markets lift this way or that as the gyrations around sovereign debt issues impact on currency, debt and sharemarkets. These issues are still not sorted, and cannot be until :

• the various European countries negotiate individually with their respective holders of Greek bonds
• a sufficient quantity of those bond holders agree to a rollover of their capital, and extended maturity dates
• the Greek government agrees to the austerity measures, and
• the Greek government agrees to the pace of those measures – including selling off large chunks of public assets.

So any headlines during this period can only reflect opinions or idle inferences or pure speculation. When we are continuously exposed to a stream of headlines each day that suggest potential outcomes, our subconscious minds will draw conclusions that we would not reach if we were in total control of what goes on in those deep, dark pools of the brain.

Here is an example of a headline that crossed my screen this morning.

How valid is the statement being made here?

Now try to keep that in mind when looking at the context of that note.

Over the last however many weeks, headlines and news stories have directly attributed volatility in markets with the ‘lingering uncertainty’ over the ability of the Greek government to meet its debt rollover obligations due in July. The conditions for the removeal of that uncertainty have yet to be fulfilled. How can there be “optimism over the Greek debt situation”, and even if there is – why would that differ from the position yesterday when apparently there was none? Why would market participants decide to buy today when they were selling or avoiding markets previously – especially when the outcome still remains unknown?

It’s all about speculation and try to pick winners

It is common knowledge that Greece is due to receive the next instalment of last years bailout and that the IMF, EU and European Central Bank have all decided that Greece now needs to do more to receive that instalment. Those extra clauses are a direct impingement on Greek sovereignty as they will involve Greece allowing the EU, and that mainly means Germany, to have direct input on the operation of the Greek state. These are very, very large steps for any nation to agree to. They would be highly unlikely to pass if presented to the Australian public. And what is happening in Greece at the moment?

Riots. General strikes. Tourists stuck on wharves, in airports and in hotels they we due to leave. And absolute uncertainty that these measures will pass.

So where is the optimism?

Wouldn’t it be more logical to surmise that all we are seeing is the outcome of horse-track punters placing their bets in larger and larger lumps as the close of the race draws near?

Keep your mind clear

That’s not an instruction, it’s a suggestion. It’s a suggestion that you consciously bring to question any headline or news brief you read about market movements and their possible causes at the moment. This is probably a reasonable position to take at any time but i think the current mix of instant technology capability, limited time frames, and large global imbalances are combining with the jockeying of news stations, blogs (hehehe…), newsletters, and others with their own bias and objectives, to create a greater level of noise than usual. Add in a couple of hundred billion of free money in the pockets of global speculators and you can see just how murky the line between financial basics and individual market movements can get.

As Seinfeld would say “not that there’s anything wrong with that” – but it’s always a reassuring thing when you use your conscious mind to ensure your actions are not being inadvertently driven by unknown influences. We can look back on the War of the Worlds  radio panic of the 1930’s as a quaint relic of slow technology of the past, and say that it wouldn’t happen in our high-tech world… but today’s very short term memory focus that lets us all forget such things as one-day crashes , suggests exactly the opposite, and presage a time when we should be even more careful of what influences our actions.

As usual, feel free to comment, criticise or send flowers.