If you ask “Mad Money” host Jim Cramer, it was a number of rumors that caused stocks to rally more than 1 percent across the board Tuesday, wiping out most of the previous day’s declines.
In Cramer’s opinion, the biggest rumor was that the European Central Bank is going to guarantee all deposits in European banks in euros, which would mean that even if a euro zone country decides to issue its own currency, their deposits would still be denominated in euros. In turn, Cramer said people wouldn’t have to worry about losing their savings overnight if they keep their money in a Spanish or Greek bank because the money will be insured either way.
If the rumor proves true, Cramer said the problem will be that the Italians could say they can’t pay their debt because the budget deficit is too big, or perhaps Greece will leave the euro and there won’t be a contingency plan. Either way, Cramer thinks these kinds of stories will appear because the market has become a “gigantic rumor mill.”
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