Oh Tay Buckwheat!!

All is fine and well in the world of the euro. Greece seems to be getting its big ass payday (assuming their austerity passes, which seems in the cards), its creditors are seemingly willing to roll over debt (assuming that is not called a default) and all is well again in the world. Time to celebrate - and the markets are doing just that. Yep, all that is wrong in Greece and the rest of Europe is gone and all is fine and well. Yep, just honky dory. No need to worry about a thing, man, no need to worry about a t'ing.

http://www.bloomberg.com/news/2011-06-27/euro-rises-on-optimism-greek-debt-to-be-rolled-over-budget-cuts-will-pass.html

And the U.S. is also honky dory. Sure consumer spending is a bit stagnant, wages are stagnant, the housing market wishes it was as good as stagnant, etc. etc., but the sun will come up tomorrow - tomorrow.

Well, maybe not tomorrow as QE2 is ending this week. That's right shoppers get your blue light specials now as the sale is almost over. Now the sale did not really do much other than provide reserves to banks so the FDIC could do a more orderly wind down of insolvent institutions. I consider that is/was a good reason for it, which unfortunately continues to exist. If spurring economic growth was the reason, well it was a total failure. A lot of the money went to foreign bank reserves, it did not really spur lending or spending, and, well, it was mostly just for show anyway.

I wrote last month I think QE3 is baked in the cake. It will be a while before the cake cools and is ready for icing, but me thinks late fall or winter will be a good time for that treat. Ben needs a bit of time to save face and come up with some new economic distress (and lack of inflation) to justify another bold move. But hey, he is the man of bold moves (just look at that beard). It will take time for him to convince others on the Fed to do it and they all voted against QE3 this past week (can you say strong fake sign of support for continued growth in the economy). Their mood will change pretty quickly in my mind, but it could well be early 2012 before they break down and do the next round. If I really believed the economy was on its way to recovery - albeit in a slow fashion - I would predict otherwise, but I think we are about to do the double on the old double-dip.

So you know what is really encouraging about the current economic climate? Honestly, I am asking you as I do not know. Okay, from the optimist side of me, let me note that a lot of corporations are sitting on pretty good stashes of cash - enough to get them through several more bad years. They have also continued to increase productivity and efficiency, which unfortunately sometimes leads to reduced workforce and increased unemployment.

Strange cycle, ain't it. People need to buy stuff for companies to make money, people need to have money to buy stuff, people need jobs to make money and companies are cutting jobs to be more efficient so people can afford their stuff. This economics stuff really sucks wind. Seems we need to devalue the dollar so other poor souls will buy our crap and we can create jobs. Hey, I think we are secretly doing that (shhh, don't tell China).

So the long slog continues and it will for a while.

Disclosures: None.