Hi Everybody, "But today, Obama is off to France, where he will face tremendous temptation.
Europe’s economic union and currency are failing. The current crisis is because the Greek prime minister has decided to have a referendum on the most recent bailout package designed by the rest of the continent to minimize the consequences of an inevitable Greek default. France and Germany want to do with Greece what Obama did with General Motors. If the Greeks refuse the plan which trades a 50 percent forgiveness of debt for surrendering fiscal autonomy to their wealthier neighbors to the north, it would mean having Greece leave the common currency in order to revive and then immediately devalue the drachma to pay off dear money with cheap cash. That would be a blow to the already anemic European financial sector, which improvidently lent the Greeks lots of money despite an obviously unsustainable fiscal path. That blow would be felt in U.S. credit markets and further constrain lending already hampered by economic and regulatory uncertainty. It also might mean the end of the euro as the other fiscal basket cases in the EU, like Italy and Spain, would be tempted to follow suit and print their way out of debt rather than accept Teutonic fiscal governance. So Greek failure is a big deal for America’s most important trading partner, which is a big deal for us. But when a country of 10 million people with a GDP about the size of Maryland’s can cause such international anxiety, one gets a sense of how close to the edge of the financial abyss the world is. Obama is going to France for a meeting of the leaders of the 20 largest economies in the world. It’s unhappy timing to have the meeting not only in the midst of the European meltdown but right there in Cannes, on the sunny shores of the Mediterranean, the symbolic ocean of red ink from southern Europe’s entitlement culture. Since the original European plan was predicated on an international rescue fund organized by the IMF, the chance of an uncontrolled default only increases the urgency of the Eurocrats to secure international aid. China is volunteering to back a loan package in a bid to enhance their status in the International Monetary Fund (where the U.S. is currently the only nation with veto power) and to get favorable terms from desperate debtors. But the U.S. will have to go along if there is to be a deal. The Federal Reserve has already been bailing a bit by providing currency swaps in which we take scrofulous euros in exchange for healthier dollars. It’s a loser for the Fed, but helps shore up the Europeans. However, much more will be needed. Funding a bailout for Europeans and European banks that made demonstrably foolish decisions is not exactly a political winner. If you thought American voters hated bailing out Citibank, wait until they hear about bailing out BNP Paribas and Societe Generale. Mon Dieu! Read more: http://www.foxnews.com/politics/2011/11/02/obama-faces-temptations-in-france/#ixzz1ccaNnisV " -- Regards, Pete http://pete-theisen.com/ http://elect-pete-theisen.com/ _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[email protected] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
