Substitute United States wherever Europe appears: "Markets Are So Rigged By Policy Makers That I Have No Meaningful Insights To Offer" 2 – I am staggered at how easily the concepts of Democracy and the Rule of Law – two of the pillars of the modern world – have been brushed aside in the interests of political expediency. This is not just a eurozone phenomenon but of course the removal of elected governments and the instalment of "insider" technocrats who simply serve the interests of the elite has become a specialisation in Europe. Many will think this kind of development is not a big deal and is instead may be what is needed. Personally I am absolutely certain that the kind of totalitarianism being pushed on us by our leaders will – if allowed to persist and fester – end with consequences which are way beyond anything the printing presses of our central banks could ever hope to contain. Communism failed badly. Why then are we arguably trying to resurrect a version of it, particularly in Europe? Are the banks so powerful that we are all beholden to them and the biggest nonsense of all – that defaults should never happen (unless said defaults are trivial or largely meaningless)? 3 – More broadly, with Mr Draghi now in situ, it is clear that I misread and misunderstood two things. First, I am simply stunned that our policymakers seem so one-dimensional, so short-termist, and so utterly bereft of courage or ideas. It now seems obvious that in response to the financial crisis that has been with us for five years and counting, we are being "told" to double up on these same policy decisions. The crisis was caused by central bankers mispricing the cost of capital, which forced a misallocation of capital, driven by debt/leverage, which was ultimately exposed as a hideous asset bubble which then collapsed, destroying the lives and livelihoods of tens of millions of relatively innocent people. Well now, if you listen to the latest from Bernanke and Draghi, it seems that the only solution they can offer up is to yet again misprice the cost of capital, in the hope that, yet again, through increased leverage/debt, we are yet again "greedy" enough to misallocate capital, which in turn will lead to yet another round of asset bubbles. Such asset bubbles are meant to delude us into believing that we are now "richer". When – as they do by definition – these bubbles burst, those who have been suckered in will realise that their "wealth" is instead an illusion, which in turn will be replaced by default risk. Secondly, I have clearly underestimated the ‘market’s’ willingness, nay desperation, to go along with this ultimately ruinous policy path. Personally, I think this is extremely worrying – the number of clients who tell me that they know they are being forced into playing a game that will end in disaster, but who feel they have to play along and who hope they will get out before it turns, is a depressingly familiar old tale. Some such folks hang onto the idea that Draghi/LTRO changed the asymmetry of risk from deeply negative to positive. Yet even these folks know that printing more money/more liquidity/more debt/more leverage is not a viable solution to our ills, and in fact will mean true supply side reform and the search for true competiveness and sustainable growth will be further cast aside, as the focus will be on the "easy gains" to be made in markets. http://www.zerohedge.com/news/bob-j...cy-makers-i-have-no-meaningful-insights-offer
There's two answers, because there's a perfect world scenario and then there's today's realities. For Europe there is no solution, no perfect world scenario applicable because they've already passed their 'event horizon' and are halfway down the black hole. Europe has been a conglomeration of socialists states since the end of WWII. By that measure alone, they were doomed to arrive at their current destination, it was only a matter of when. Add to the that, the fallacy that they could merge the same conglomeration of socialists states and turn them into the Brady Bunch, ignoring their different languages, cultures, currencies, historical grudges and prejudices, sovereign self-interests, et al. Just look at Greece right now. Greece is the equivalent of an accident victim that's been in a coma for 4 years, declared brain dead and kept alive by machines. The EuroZone members that just approved the latest (second round) bail-out did so to limit their losses from the first failed bail-out, basically keeping the body alive long enough to harvest it's organs and consume it's sovereignty. Spain, Portugal and Italy are all next in line for the surgeon's harvesting. At this point, I can't see how Europe avoids doing what it's always historically done when crisis hit critical mass...they start wars. First will come the civil wars and then the regional versions as resources dwindle and failed and inept leaders attempt to divert public/nationalistic attention from their own failings and create strawmen/bogeymen. We should have been studying Europe like it was a petri dish, showing us what culture/s not to grow. Instead, Obama has hit the accelerator attempting to "change" us into Europe. Sorry to be so pessimistic, but we no longer see men/women of good conscience and genuine patriotism enter the political arenas to lead their nations. Just look at who the leaders are today; Sarkozy, Merkel, Obama, Putin, et al...good God
The office of Senator Jeff Sessions, ranking member on the Senate Budget Committee, sends along this chart, showing that 'America’s Per Capita Government Debt Worse Than Greece,' as well as Ireland, Italy, France, Portugal, and Spain:
