Wednesday, June 8, 2011

Greece is the Word, Part Two.

I’d like to think that for those of us who have spent the better part of the last few years trying to prepare ourselves and our families for the ongoing and now accelerating financial disaster, the parade of daily events have now moved beyond being harbingers of troubles to come and have taken on more of an air of farcical comedy. If watching the DJIA tumble yesterday in the closing minutes with each bit of flapping drivel that came out of Fed Chairman Ben Bernanke’s mouth wasn’t entertaining enough, this morning’s CNBC piece titled “Obama Presses Europe, Pledges Help for Greek Crisis” nearly had me exhaling coffee through my nose in fits of laughter. Sometimes laughter is the only way to cope with tragedy.

It’s not that making obvious corollaries has ever been the strong suit of the gods at CNBC but this is ridiculous. After being basically flat most of the day, rumors started spread about the contents of Bernanke’s non-event speech around 2:30 and the numbers started to decline. As soon as he opened his mouth and started spewing his MOPE at 3:45 they went over the edge and fell another 55 points, down 108 points off the day’s high. What was he selling? This inflation is just a “temporary” event caused by a few issues with some commodities. Never you mind those churning noises coming from the basement of the printing presses at the FED working 24/7. Nothing to see here, move along, move along.

Then we get the absurdity of President Obama “pledging” help for any second (or is it third or fourth, I forget) round bailout of Greece. The CNBC article’s statement that Chancellor Merkel is “under political pressure at home to avoid being the financial savior for other struggling European countries” has got to be the understatement of the month. Merkel’s party has been getting its walking papers handed to them in local elections. The German people are simple fed up with financing the foolishness on the Euro periphery and Merkel knows that if she doesn’t get adequate cover from Obama for flushing more money down the Aegean toilet she’ll be looking for another job soon. She may well be done for either way.

I would suspect however that the President’s “pledge” isn’t much more than lip service. Facing his own electoral demise, if he’s not aware that the American populace is no more in the mood for bailing out failed foreign states than the Germans are, then he lacks even what little grasp of reality even I would credit him with. As more and more 99 weekers fall off the back of the unemployment compensation bus and even larger numbers pour into the front any political posturing that “Obama saved Greece” will inspire anger and resentment not admiration.

Just as with our own fiscal condition (anywhere from $60 Trillion to $100 Trillion in unfunded liabilities depending on who you talk to and what you do or do not include in the calculation) there exists no viable or functional methodology that will avert the inevitability of a default of some form. Year over year productivity in the Greek economy has contracted by 11%! Taken alone industrial production is down by an even larger number. Given such a reality just how is even more austerity in government spending (laying off workers and putting them on the dole) and increasing taxes going to facilitate an even larger debt obligation even if some agreement to provide Greece with more money could be reached?

Can meet foot, see you down the road, has reached the end of its usefulness. Posturing, printing and vain management of perception is coming up against hard political realities, and politicians will always, always, always put the preservation of their positions of power over and above any other consideration. They know it won’t work, they know it’s all just a game of extend and pretend, they just don’t want the voters to know it. At least not until we get past the next election cycle, and then they will be telling us one more time to trust them to “fix” the problems they created. I think we’re in for a long hot summer in every possible way. By the time October gets here we may be faced with an entirely different and worse if that’s possible, political and economic landscape than we have today.

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