Kickin' Cans

A nice ($65 billion) relief package was announced for Greece over the weekend and everything is dandy. The VIX dropped, the cost of insuring against Greece default dropped by one day records and the DOW exceeded 11,000 for the first time since 2008. And the economy in the U.S. is expanding at roughly a 5% annual rate. Yeah baby, off to the races!

You know where I am going with this of course. According to this linked post, which I highly recommend reading in full, there are still some issues with Greece (as in you can put a whole lot of lipstick on it and it is still a pig), so the plan at most avoids immediate problems and, as the post notes, kicks the can down the road. Greece's problems are by no means over and the rest of the PIIGS are being called upon to help Greece out. Now that will work well - not.

http://www.nakedcapitalism.com/2010/04/auerback-the-piigs-problem-maginot-line-economics.html

For the GDP growth in the U.S., well I might opine that just a smidge is a trillion or so in government spending, which seems to be nearly at an end, and over half of it is inventory buildup. Inventory buildup? Yes, at least certain retailers and others seem to be buying into the line that the worst is over and the economy is about to take off.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUipGJoGciA0

Now I could add to the mix some info on continuing high personal debt levels, unemployment in the U.S. still around 9.7%, an aging population (here the U.S. looks good compared to the E.U. and Japan) and numerous other considerations. We have been kicking a lot of cans and those cans seem to be getting bigger with each kick. I hope you have steel toed boots on as the next couple of kicks are going to hurt even more.

Disclosures: None