Sorry So Silent for Sooo Long

I have been radio silent for a very long time as the economy here and elsewhere has largely focused on monetary policy, exchange rates and the like, which is not an area where I feel any confidence in posting. Those issues are still front page, but I thought I would add a few thoughts to the discussion.

First, I will truly be surprised if Greece and/or Ireland do not leave the EU this year so they can establish (and devalue) their own currency and at least partially default on some sovereign debt. Iceland did and is already on the road to recovery. Lenders, it seems, have no long term memory.

I expect Ireland to go first as it has political changes early in the year. Sure, there will be EU pressures on them to not do this, but what is good for the EU is not necessarily what is good for Ireland and Greece. The EU is supporting them simply because banks in Germany, France, the UK and other EU associated countries have too much bank debt tied to their sovereign debt. If the EU really cared and wanted to help, the loans from the EU would not be around 6-8% - they would be interest free to help these coutries in need. The people in these countries are not stupid and will figure out in the first six months of this year that their citizens are better off leaving the EU, establishing their own soon to be devalued currency and restructuring debt so that the issues rest with the banks that took the risk and not with the taspayers. I only wish more countries, including my own, put the pain to those who knew they were taking an investment risk instead of taxpayers and our childred, grandchildred and yet to be born future generations who will be stuck with this mess.

Again, I vote for an international procolmation that all debt in the world is extinguished and we deal with the mess and start over. The folks opposing this the most will likely be those that caused our recent mess to begin with and I am fine with that.

Obama

Okay, I like the guy and think he is trying but he still is surrounded by fools. Moreover, I, at this point, see no route for him out of this. He touts "innovation" as our national way out but we have had plenty of that over the years. We simply export all the labor of implementing innovation to other coutries. This is why U.S. companies (with the help of trillions of government support) are doing well while the U.S. population is still struggling - innovation here and production there. Apple is making tons of money but its IPods and IPads are assembled in China in a factory with nearly a half a million workers (and a high suicide rate). Innovation will not change the export of labor.

I have no good answers myself, just the reality that where we are today is not likely to change too much for individuals. Companies and the top paid individuals will do well this year with all the governmnet tax breaks and QE2 support but this will not add many jobs and will add drastically to the deficit. It will take dollars out of the pockets of individuals and put them in the pockets of corporations and their executives (including big banks) who will spend these dollars on foreign labor. Our children are screwed and other than fighting for education spending to not be reduced I am not sure what we can do to save our childrens' future. Otherwise, stupid is as stupid does.

Let me just say I am a bit outraged. I read that the wage freeze Obama announced in his address will save $400 billion over ten years. Compare that to the CBO estimate the next day 0f $1.5 trillion deficit this year. Yes, with over ten years in frozen wages in the federal government we may offset less than 30% of this single year's deficit. Bring out the band.

I am 51 years old and my current retirement plan is finding another country where it makes sense to retire. Ask me if I am kidding . . .? NOT!! The U.S. and most of the EU is truly screwed for a generation or two to come so I am weighing the options for me and my family. Nothing immediate, but probably in the next 10 years. I am serious and you should start evaluating this prospect too.

Disclosures: None.