remember back in the fall of 2008 when things were really scary-bad here and it looked like we were headed for a meltdown and all it took was a couple trillion dollars' worth of TARP money and other fiscal nonsense to provide the world with almost two years' worth of phony assurance that the US was on the road to recovery?
well, when things finally got equally scary-bad for europe this past week and germany was forced to resort to the same desperate ploy, instead of the breathing room i'm sure they thought they were buying, the false euphoria only lasted for a day. apparently, everybody's finally gotten wise.
if you're unclear about what all this means, here's the best assessment i've seen of the european bailout fiasco, from one of the smartest, most prescient (and profitable) hedge fund managers out there, in a letter he wrote today to his fund's investors. a sample quote:
Germany weakened itself as it has now abandoned the core bargain of the Euro (which was that they would never be responsible for another country’s debt) by opting to be the largest guarantor of a new loan program that essentially makes European countries jointly and severally liable for emergency funds for the worst fiscal offenders in the EU. It has begun a process of ceding its fiscal sovereignty to the over-indulgent countries.
what's worse than falling on your sword and committing national suicide? doing it for nothing, that's what.
read the whole letter--it's short, sweet and to-the-point.
2 comments:
We have close friends in Denmark and I'll have to find out what they think of the Greek bailout. Denmark and one or two other countries who are otherwise members of the EU drew the line at the Euro and maintained their own currencies. Whether that will insulate them long term from an Euro melt-down or not I don't know.
will: norway, denmark, sweden and iceland--oh, and switzerland--were all heavily pressured to jump on board back during the euro's inception, and all wisely declined. iceland is probably the only one of the above who is regretting that decision today--and only because they're in desperate need of a bailout themselves.
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