Caylus.is the Dax really overpriced? i wonder. if i ran a hedge...

Caylus.

is the Dax really overpriced? i wonder. if i ran a hedge fund operating in europe, i would be long DAX and hedge my position by shorting southern european stock markets. it's really a proxy bet of long mark versus short drachma, lira, peseta and escudo.
so what happens if germany leaves the euro and uses the mark again? i think the mark and DAX would soar. and why would the DAX soar apart from being in a stronger currency? because the debt of german based companies would be mainly written in euros. apart from that, i would expect the southern european bourses to slump with the euro and the monetary inflation which accompanies a slumping currency would further depress those stock markets.
and german debt written in euros would slump as the euro slumped and the mark soared. now that would be one virtuous circle, compared to the vicious circle in southern europe.

now re the S&P... i've increased my short position because i like the scenario that it may close MOC on friday at ... wait for it ... 1040 (sitting on the abyss)... just to give the G20 meeting something to think about this weekend.
after Krugmann's belittlement of Alex Weber in the last day or so (and i wonder who put him up to that), i don't discount the US Fed bringing the S&P down to the edge of the abyss to put maximal psychological pressure to bear on Weber.

but i think Merkel and Weber are in the mould of Maggie Thatcher ... and not for turning.

for those who don't follow these things, Weber is the head of the Bundesbank.