"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET
Wall Street Journal Editorial Page Dissects the European Bailout Plan
I would like to recommend the commentary from the editors at the Wall Street Journal dealing with the proposal that came out of Europe yesterday; a proposal which launched a massive short covering squeeze in both the Euro and in the equity markets.
Their editors are much more eloquent than I am but the crux of their analysis is in complete agreement with my own - all these leaders have done is to temporarily paper over a problem that will not go away until the root of this weed is pulled up and disposed of. That however requires unpleasant business that will no doubt engender a loss in popularity to whatever leaders brash enough to actually roll up their sleeves and get down to the dirty business of fixing the cause of this morass.
Simply put - those governments in fiscal trouble have spent too much for too long and can no longer afford to do so.
If that sounds familiar, it should - it is exactly the path the current administration is leading the US down.
Forestalling the day of reckoning might make political sense in the short term but in the long term it is the stuff that composes the ruin of nations.
Everyone Bails Out Everyone
European deal has something for everyone, except the real problem.
When is a credit-event not a credit-event? When the CDS contagion would cause more damage than they can contain. However, making this 50% "haircut" NOT a credit event has it's own consequences. And further, if Greece can get a 50% discount on it's debt, what message does this send to the other little piggies? The unintended consequences are compounding rapidly.
ReplyDelete