Not a good kick by the EU. That heavily dented can is not much further down the road than it was. Not surprising that rates for some itty bitty EU countries like Spain and Italy have resumed their rise.
http://www.calculatedriskblog.com/2011/07/update-on-europe.html
Those who know better than me say it will not work - other than for a short while. Not saying I told you so, but . . .
http://seekingalpha.com/article/281337-kicking-the-can-down-the-road-one-more-time
Obamarama
I watched Obama tell us why we are screwed when we do not reach a deal on the budget by next week. Nice speech I thought. Better than Bonner's presentation. Obama has the advantage of the majority of Americans agreeing with the balanced approach, i.e. lots of cuts but some tax increases for those that can afford it. I think the cuts should be tailored to avoid small businesses if possible as they provide the jobs that we desperately need, but I do not see that as happening. In any event, this could get very interesting if the U.S. enters into a default situation.
This takes me back to a post I did like over a year ago. What would happen if everyone in the world, including governments, defaulted on all their risk at once and created a clean slate? Now I know a lot of the U.S. debt is owed to SS, so that would be bad, but without the $14 or so trillion in debt, we could afford SS and the other entitlements. Sure, all the big banks would fail, as would other financial institutions. I am holding back the tears. The whole world it seems is crippled with debt but if we called it all gone at once we would have a big mess but a better base from which to build (okay, not all of us, but most of us). None of us are looking at a good few decades ahead either way.
Disclosures: None.
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