Two cents…used to be real money. Today, well….I guess we’ll see.
So, can you hear the bells? I can, even now, with ears that have taken much abuse from 30+ years of loud music. Perhaps I only imagined them before, but they seem much, much closer today. It’s possible that, if you can’t hear them, you aren’t listening.
Today, the US joined into what amounts to a rather significant global bailout. You weren’t consulted about it, but it is going to cost you. The argument, of course, is whether doing something else would cost you more.
If you were to ask those who’ve made this decision, surely they would tell you that your needs were, in fact, considered. Our leaders, God bless them, do worry about your survival, I think. Well, after a fashion. They believe, for instance, that you really need them, first of all, and their banking cronies as well. They know that your super markets and gas stations will close up without the system that they’ve engineered and, one must agree, they are right about that.
Hank Paulson knew it too, back in 2008 when he feared that we’d be knocked back to a modern version of the middle ages. But, has anything really changed since the first bailout? Do you imagine that anyone has actually fixed the basic structural issues that caused the crisis to begin with?
I think we all know the answer to that. Banking reform doesn’t help us in the least. Oh, well, except that ARCO now accepts credit cards, I forgot about that.
No, anyone with half a brain knows that our system – as it has evolved – now requires an exponential and perpetual growth in debt. The underlying problem is that, over time, it takes more and more debt to produce real growth in productivity and income. Now, of course, we borrow and spend trillions (or our governments do it for us) in the hopes of getting returns that are, at best, only slightly negative.
Today’s events give us a clue as to what the end game looks (and smells) like. It looks like Christmas and smells of desperation, rather terrible, pee-stained desperation. Now, I don’t know if we merely folded to Agela Merkel’s bluff or, more likely, everybody at the table understood that there was simply no other option available.
The rumors suggest there was a major European bank about to fail, ala Lehmans. So what? Contagion is their greatest fear, quarantine (and, possibly, war) their last resort. In the meantime, you simply keep pumping the drugs (money) into the patient and hope for the best. But, today, at the very least, they’ve tipped their hand and we know just how serious they are.
In the weeks to come, I would expect more definitive announcements on restructuring of the Eurozone, not that it will much change the dramatic devaluation of the dollar that will ultimately result from continued “global QE”.
This, after all, comes down to fairly simple math. There’s nothing personal about math, is there? One exponential curve plotted against another. You don’t have to read tea leaves. Still, this is a good time to buy the things you need and sell the things you don’t.