whidbey

Report from Europe for Friday, Sept. 4

Fair comments, but hardly relevant to the meaning for America.

The EU thinks they have gotten the upper hand on recession effects and can quickly return to "normal" interest rates and productivity of better times. This is dangerous for all.

The American government has not got a chance of escaping Hobson's choice. No longer can we inflate to pay the bills, or default on obligations, or some combination of the two. The US has not got those three choices open. We have one open: Hobson's.

The sole choice is end the Congressional spending and turn the money loose on the consumer in various ways and hope for a recovery in 12 months. In the meanwhile where does the EU go for growing markets for its export goods? Cut prices and maybe the emerging economies will take some. All at the price of no or few sales to the USA (20% of the EU traditional market). It is bleak.

The EU is ready to do to the whole US what UK did to the US on its Libya prisoner swap: Lie, ignore the long run and wish the US the best and all that, you know. We are suckers being abandoned - Not that we don't have it coming.

Closing Update for Thursday, Sept. 3: Market Modesty

Thanks,

Nice summary and useful to those interested in both indexes and the principals.

I am always surprised that the GSEs are still being hauled around as possible reorganizations. How can this work? The suggestion points out that larceny lurks in the heart of Wall Street.

There is no fix for these flat tire GSEs and we need to stop flogging the zombies to the market. No one can afford the GSE and if someone does swallow them, we have a new zombie.

Paulson Finally Doing the Right Thing

Isn't final demand the determining issue of recovery, all else equal ? The banks are just utilities and we do need them to function reliably but they are not the final objective which consumption. We need money in the hands of consumers, you decide how you want it there. I hate stimulus hand-outs. I like tax holidays, and government backed loans to homeowners in trouble. I know, the dollar goes to Hell, but not if we can stabilize the economy and the consumer. Those the magic buttons that will cause the elevator to rise again. The first bounce gets tested, so no long term investing yet. But, one find day....