The Local Paper

• This is a crisis. A worldwide crisis.
• Markets love testing the will of central bankers and giving them a number on how much they’re willing to spend to bail out Greece (or Spain or Italy) will only act as a challenge.
• The only reason U.S. financial markets aren’t more tumultuous as the debt ceiling nonsense plays out is that their more worried about Europe blowing apart.  Not the Europe blowing up is a bigger deal than the U.S. defaulting, but it’s more immediate.  There’s, what? two whole weeks before they have to worry about a U.S. default.  Eons in trading time.
• I think some in Congress (mostly Republicans) think that they can “fix” missing the deadline by simply passing something after the fact that raises the limit and returns the situation to the status quo ante.  That’s wrong.  Once we cross the Rubicon of default and (presumably) get downgraded, there’s no turning back.  Once a borrower indicates a willingness to consider not paying its debts, that borrower gets treated differently in the credit markets.  You can’t unring the bell. [That sound you hear is my favorite writer, George Orwell, hater of idiom, spinning in his grave at my use of two, no three! in one little bullet point. –ed.]
• I stink at poker, but somehow I think that I’d like to play poker against President Obama.  Less so Senator Mitch McConnell.
• Trying to negotiate with Rep. Eric Cantor (R-Petulant) reminds me of those discussions we had with our kids when they were twelve.
• Being a big believer in the Law of Unintended Consequences, I continue to be very worried about this situation, and that fear grows with every passing day.
• The combination of the Europe situation and our own a) immediate problems with potential default and b) our long-term structural deficits leave me fearful that we’re in for an extended period of austerity, slow- to no-growth, increasing distress among the populace and general trouble.
• What’s happening in Europe is the sort of thing that used to start wars.
• So if you think Europe is a bad place to invest and the U.S. is about to default, where are you going to put your money?  Corporate bonds?  (Communist) China?
• The sinking, awful feeling I have is that this all is going to get much worse before it gets any better.

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