Is Europe drinking the same punch?

Why balance a budget and reign in spending when you can just print your way out of it?  That has been the US motto for years. The "super-committee" was only super at demonstrating how this problem isn't important enough to put politics aside. There are answers, there are solutions, they just aren't worth foregoing political bias because the problem hasn't been fully realized. The US can still borrow at insanely cheap rates, and has been able to print away without negative inflationary effects. Why fix an illness when its symptoms haven't slowed the body down?

All the "turmoil" in Europe is only in focus because they have decided to take the high road and fix their problems rather than hide them under a blanket of freshly fabricated Euros. They are attempting to deal with their debt problems, which are very real, by reigning in spending and imposing strict budgetary constraints. They are facing this head-on. That means that the short term pain will be felt greater than in the US, but the underlying issues are being tackled.

So say for a second that it actually works and in a few horrible years they have cleared the hurdle. That puts them in a long-term fiscally responsible position. Meanwhile, the US has continued to delay the inevitable and drink the punch of the printing press. The difference now is there is an alternative to the mighty dollar. That is when we would realize the follies of our ways. Right now, everyone is in the same sinking boat and we are still captain. But if Europe comes out of this in a righted ship then we go down hard as everyone jumps on board with them.

Most people seem to believe that Europe will have to monetize their way out, and I have been in that camp. The debt seems too large and the people too unwilling to fix it any other way. However, they are being bold and righteous and perhaps we should consider if they do have a chance after all.

Sean

Jon Corzine

I just finished watching the tape of Jon Corzine’s testimony to the Congressional Committee….

For those of you who don’t follow to closely what is going on, he is a former senator, former governor of new Jersey and former CEO of Goldman Sachs.  He was CEO of MF Global - a hedge / investment fund.  MF Global just filed for bankruptcy.  MF Global had customer money and its own money.  When investments in their own account started losing money MF Global stole $1.2B from their clients’ accounts, transferred that money into the firms account, and lost it all.

Not even Bear Stearns or Lehman Brothers did that……So what have we learned since the crisis?

When asked by a panel member if he ever transferred or knew of a transfer from client’s accounts into the firm’s account Corzine replied, “It was not my intent to use segregated customer accounts….” He was asked twice and gave the same answer.  He used the “intent” word 5 times during his testimony.

This is really pissing me off…..Like cutting open an old wound…..The United States of America almost fell into the abyss in 2009, luckily backed away from the edge, but now we are right back there looking down again. Debt is exploding globally, jobs disappearing, middle class shrinking, etc.   And for those of us who think we cannot go the way of a 3’rd world county meaning paper dollars everywhere, civil disobedience, etc.,  I suggest you re-evaluate that belief.

And I am struggling with what to do about it.

Michael