Posted on 06/03/2012 10:54:34 AM PDT by whitedog57
This should be an interesting week in global markets.
President Obama, speaking at a Chicago fundraiser on Friday, said that a report showing the slowest month of U.S. employment growth in a year was in large part “attributable to Europe and the cloud that’s coming over from the Atlantic.” The “whole world economy has been weakened by it,” he said.
Sorry, President Obama, the cloud you are referring to is outrageous government spending, entitlements and debt … and the cloud is already here. Remember, 50% of Americans do not pay Federal taxes and 50% of Federal government spending is on entitlements.
President Obama is calling for Europe (actually, Germany) to spend like mad and bail out weaker European countries on The Med.
George Soros, the Hungarian billionaire, has stated that Germany has 3 months to go to stem the Euro crisis.
There is talk of a Eurozone version of the Federal Deposit Insurance Company (FDIC) and a one-size fits all Eurozone bond! That is, let the Germans with a 1.171% 10 year sovereign rate subsidize Greece, Portugal, Spain, Italy and France (all above 2%) with a Eurobond one-rate fits all bond rate. It is like people in Texas agreeing to jointly issuing bonds with California.
On the other hand, German Chancellor Angela Merkel rejects debt sharing as a solution. In other words, Obama and Soros want Germany to bear the brunt of the free spending Socialists nations (similar to calls in the U.S. for the Federal government to bail out free spending California).
Europe (and the U.S.) are in uncharted waters. Few want to suffer austerity (even when caused by politicians giving away entitlements like candy), so the only logical path is to keep bailing out the problem children through low rates and … stimulus. Neither of which will work, of course. This is what is called a juggernaut.
Risk On
I am not unsympathetic to the panic that is being felt by President Obama and George Soros (as well as Europeans and Americans).
The Citigroup Economic Surprise Index for Major Economies continues to decline. In fact, it is looking like late 2008 and the relapse in 2011.
When I compare the Citigroup Economic Surprise Index with the CBOE Vixa futures (volatiilty) index, we see a widening risk spread.
So with both the CBOE VIXA and Citigroup Surprise Indices, we see increasing volatility (risk) rearing its ugly head.
But governments tend to rely on failed policies since it is the only one they know.
It reminds me of the great baseball book “The Natural” by Bernard Malamud where the hero (Roy Hobbs) is so infatuated with self-glory and temptation that he forgets about his own life’s lessons. And strikes out in the final game. [Of course, the film “The Natural” has Roy Hobbs overcoming all odds and hitting a Titanic home run to save the day (and his reputation)). The film says that you can succumb to temptations and excess (e,g, entitlements for all and massive debt) and still win the game! It missed Malamud’s point: nobody ever learns.
Including Keynesians.
The graphs on growing risk are scary. This guy always has great graphs.
The continuing kick down the road - all builds up, eventually, to a collapse - which is exactly what the radical socialists want. So when the world comes tumbling down, they will have the saving solution (by their standards) - purse communism.
I think the best way to stop the problem is to deport that war criminal Soros to Russia or Thailand.
“attributable to Europe”
Hmmm....Barry thinks the failed socialist policies of Europe are bringing down our economy. So, logically, our economy should be more socialist?
They never learn.
President Obama,... said that a report showing the slowest month of U.S. employment growth in a year was in large part “attributable to Europe and the cloud that’s coming over from the Atlantic.”
We all know it must be Bush’s fault; but, I’m having trouble figuring out exactly how. Was Bush responsible for the report? For Europe in general? Or is he somehow responsible for that cloud crossing the Atlantic? (Does he still have that Katrina weather machine?) Can anyone clarify this for me?
If you build the house of cards higher with anther deck, these people think it will be stronger.
Europe at war within five years.
Wouldn't it be more like our Federal Bonds?
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