Does everyone have their heads stuck in the sand?I can't believe how low the VIX is.
You've got the Greek tragedy playing out in Europe. Throwing another$100 billion at the problem this week won't solve Greece's problem. Theywill need more money by the end of the year. If Greece defaults, Ishould say when Greece defaults, it will take Wall Street downwith it. Wall St issued approx $160 billion in CDS against the Greekbonds that were sold to French and German banks. I believe it was Moodywho downgraded Greek bonds again this week so they have to pay even moreinterest on their bonds. Why doesn't the ECB just invade Greece andtake over the country. Buy everthing in sight for 10 cents on thedollar. They just have to put in some puppet dictator who represents theECB and will quash any civilian backlash. Ahh... just a minute... Ihave a message coming in from my producer.... Ooops. Never mind. I'vejust been told the ECB has already done that. Hmmm. I was told theGreeks were smarter than the Irish. I guess not.
Moving on to Portugal and Italy I see they were also downgraded in thepast 2 weeks. Then there is Spain which is in serious financial trouble,much more so than Greece. If any of these countries default, theothers will fall like dominoes and will likely collapse the Euro. Whereis the ECB going to get all of the money to keep bailing out thesecountries? The ECB secretly got around $550 billion from the $800billion Tarp fiasco, but that money is running out. If it wasn't forthat secret bailout of funds from the Fed, ECB would be broke. It is toobad Greece can't print money the way the U.S. can.
Speaking of the U.S., it is certainly reassuring to see Congress pullingtogether to try and solve the debt crisis. I've never seen so many hardworking public employees putting their country first and putting theirpartisan bickering on the shelf. I'm sorry, I must have hit my head.What was I saying? Oh yes, Congress is raising the debt ceiling. Let'ssee, they want to reduce $4 trillion dollars in 10 years from the debt.Wow! Let's do some math. The 2011 deficit is estimated to be $1.65trillion. If interest rates go up, they will have to pay a lot moreinterest on the debt. So I'd say they'd be lucky if they only had a $1.5trillion deficit for each of the remaining 9 years. So that is $1.65 +9*$1.5=$15.5 trillion give or take. And congress will try and reducethat by $4 trillion so it will be only $11.5 trillion. That is on top oftheir existing $17 trillion debt. So in 10 years the U.S. will have$28.5 trillion in public debt. That is on top of their unfunded liability for Medicare, Medicaid, and social security which currently amounts to around $50 trillion.
This is a lot like saying, "Do you want to hit the wall at 90 mph or 80mph?" It really doesn't matter. You're going to be dead either way. Andso is the U.S. economy. Yet everyone seems to think Congress knows whatit is doing and will solve the problem. Little do they realize it wasCongress that caused the problem in the first place.
And Ben Bernanke said last week, "Gold is not money". If stupidity was acrime, Congress along with Bernanke would be doing life. The stupidityvirus has run amok in Washington and there is no way to inoculatethemselves from it. Everyone in Washington has come down with a case ofthe Stupids and unfortunately it is fatal for the economy.
Wiz