Image: Earth encircled by money © Bob Jacobson, Corbis

This week saw the Greek Parliament pass a controversial austerity bill, paving the way to give a country that is broke more money that it can't afford to pay back. Watching this game of kick-the-can in Greece and the rest of the PIIGS countries makes one scratch one's head wondering why putting a Band-Aid on a cancer patient is deemed to be such good news.

I wish I had a satisfactory answer. Right now the markets are focused on Greece, but variations of those same issues are at work for all of the PIIGS nations, and those same questionable sovereign debt credits also affect the entire European financial system.

Do over unto others

Here in America, the giant do-over created by the government in the form of then-Treasury Secretary Hank Paulson, Congress and the Federal Reserve in late 2008 and early 2009 has been another exercise in kicking the can down the road, and next to nothing has been done to deal with the underlying problems.

To this day, a shockingly large number of people seem not to understand that the predicament we are in is a function of the real-estate bubble we experienced and, for that matter, the equity bubble that preceded it. We have pursued policies in this country for more than a decade that have encouraged the misallocation of capital, and all we have done in the wake of those burst bubbles is pursue more of the same wrongheaded policies.

Image: Bill Fleckenstein

Bill Fleckenstein

Regular readers know I believe this will end in a funding crisis. But when you take a step back and look at the current tribulations and the prior excesses, it seems completely illogical that world equity markets could be as sanguine as they are, especially if you look at the present state of the U.S. economy in addition to the macro factors discussed above.

Though I know it is not very satisfying, the only conclusion I can come to is that one never knows where the lunacy caused by money printing will show up. I believe money printing (and a lot of the computerized trading spawned during the money-printing era) has been responsible for the seeming inability of the markets to discount much of anything.

No sense of direction

Thus, it seemed during the week before last that the market was headed for more weakness (though it had already declined for six weeks), while the last week in June seems to have taken a page out of the don't-worry-be-happy playbook that we saw so often from 1999 through 2008.

Having said that, I have not changed my view regarding more pain ahead in the stock market, since QE3 won't arrive without more suffering. Just as the recent ugliness was a bit of a head fake, rallies like we have seen this week -- while seductive -- may ultimately fail. I am looking for a few potential shorts, given that I expect head winds in the tech sector. But as I have noted, such tactics are always tricky in a money-printing environment.

Don't bank on it

Speaking of tricky, one might have expected that the financial sector would have been stronger after all the hoopla Wednesday about the $8.5 billion "settlement" by Bank of America (BAC, news) for some of the subprime claims against it, but the party wasn't all that great. I think this was largely because that news is not necessarily anything to be excited about.

So-called legacy lawsuits from the bubble era may continue to find their way toward the "banksters," who still have mountains of real-estate-oriented issues to deal with. So while the settlement may be a relief to Bank of America, it doesn't resolve anyone else's problems, of which there are plenty.

They're not very demanding lately

Since I am keeping an eye on tech, I noted the June 24 release of the latest Micron Technology (MU, news) and Oracle (ORCL, news) results, which were spectacularly unsuccessful at beat-the-number. (They were actually very weak and bode ill for the entire tech sector.) If one looks at the leading end markets for tech products, whether it be Tech Data (TECD, news), Hewlett-Packard (HPQ, news), Dell (DELL, news), Ingram Micro (IM, news), Staples (SPLS, news), etc., it is apparent that end demand is none too strong.

Thus, the reports from Oracle and Micron ought to be quite disturbing for anyone who has followed the sector for some time (notice I didn't use the goofy word "space"). It does appear that there is liable to be some indigestion when many of these tech companies report their second-quarter earnings. Not that this quarter's are necessarily going to be a problem, but the guidance could be on the ugly side.

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Everybody loves a surprise party

Having said that, I thought it was quite interesting that Microsoft (MSFT, news) last Monday was, for once, much stronger than the market in general, as it gained almost 4% on no news (except the fact that the next day would see the release of Office 365, its newest suite of cloud products). (Microsoft is the publisher of MSN Money.) In fact, that stock has been sneakily acting a bit better than the tape at large for the past couple of weeks, which is a distinct change in its pattern. Perhaps now that everyone has totally given up on it, Microsoft will surprise a few people.

At the time of publication, Fleckenstein owned shares of the following company mentioned in this column: Microsoft.

This column is a synopsis of Bill Fleckenstein's daily column on his website,, which he's been writing on the Internet since 1996. Click here to find Fleckenstein's most recent articles.