Biderman on poltics and the need to change the constitution.
There seems to be little doubt that we need a new constitution, or at least a new way of governing ourselves. The response to my post July 4 rant that we need a constitutional convention was mostly positive. There were several who worried that a convention could get hijacked by nutcases but almost everybody seems to agree that what we have got now is not working.
Upon reflection, I think that we most certainly will be having some sort of new constitutional convention in the future. There are two ways it will happen. The first is as a result of our paternalistic government going bust in trying to provide everything to everybody. In essence we will be forced to start over; and hopefully a convention will be peaceful.
It sure seems the foundation of the European Union and the Euro will feel the first reality pinch check after the “surprising” upswing for the extreme parties in Greece over the weekend. Unfortunately, rather scary developments are taking form in this United Europe. What’s next, Weimar inflation, and after that everything that followed? Some color on the “new” Greek dilemma, via Ekathimerini.
Greece was plunged into political uncertainty on Sunday night as national elections produced a fragmented Parliament of at least seven parties and a result that could preclude New Democracy and PASOK forming a coalition government over the next few days.
The possibility of the two parties that backed Greece’s new bailout combining their forces was undermined by a collapse in their support, particularly in the case of PASOK. The Socialists suffered a drubbing around the country and looked to have been beaten into third place by the Coalition of the Radical Left (SYRIZA) with what could be PASOK’s worst ever showing at the ballot box.
The election result was also notable for the entry into Parliament of the neo-Nazi Chrysi Avgi (Golden Dawn), which in 2009 had only gained 0.29 percent of the vote and looked set to gather close to 7 percent at these elections.
Biderman on Europe.
Europe is in big trouble, and the trouble is getting worse, much worse listening to all the news lately. Why it is getting worse is that it is now apparent that neither the left nor the right has a workable solution to the two major Europeans issues, overspending and declining economic activity. By the left, I mean the existing political structure of government dominated economies. By the right, I mean a German style austerity program.
In my opinion the real problem is that the creation of the Euro in 2000 has allowed each member of the Eurozone to spend more than it makes regardless of what actually is going on in the local economies.
What Europe spends big bucks on is cradle to grave support by the state. The prevailing belief is that everyone deserves to be taken care of. The key word here is DESERVES. Therefore, borrowing to pay bills even if you cannot afford to pay back the debt is obviously the JUST way to go. Video below.
Willem Buiter talks to Viv Davies about Greece and the Eurozone. Buiter believes that Greece’s public debt should be written off, it’s banks recapitalised and that the country be provided with sufficient conditional support to grow its economy. They discuss the LTROs and the risks of loss of control over the aggregate size of the balance sheet and potential national central bank insolvencies. Buiter suggests that now is not the time for self-righteousness amongst European policymakers.
Interview link here.
Another must read “Hmmm” report, courtesy Grant Williams.
One way or another, we are no more than weeks away from the first de- fault in the history of the Euro.
Yes, I know the Greeks have promised to give the Troika what they want in the way of cuts and expanded austerity. Yes I know we have been promised that we will have a ‘solution’ by last week February 15 Monday, but let’s get real for a second here, shall we?
The situation breaks down like this:
The Greeks have been told that, in order to receive the €130 billion €145 billion bailout they so desperately need, they must agree to sweeping new cuts and promise to implement them.
Not implement them. Promise to implement them.
Key Call 1: Buy Gilts with Sterling exposure
Key Call 2: Buy US investment grade corporate bonds
Key Call 3: Buy 10Y US Treasuries, expect the curve to flatten
Key Call 4: Buy Emerging Asia curve steepeners (but caution on EM FX)
Key Call 5: Long US Dollar / Short Euro
Key Call 6: Long Gold / Short Oil
Key Call 7: Long European Telecoms / Short European Utilities (equity)
Instead of getting down to business, they are absorbed in policy wrangling that seems absurdly trivial given the scale of the tasks they face. At a cabinet meeting last Thursday, Finance Minister Evangelos Venizelos and Transport Minister Makis Voridis of LAOS fell out over a draft law to accelerate amicable divorces. Marriage, Voridis argued, was “a central component of our value system” — therefore LAOS could not agree to the law. Papademos remained silent.
This isn’t the first time the LAOS minister has blocked a decision. Recently he resisted the complete liberalization of the issue of taxi licenses, and publicly threatened to resign.
Politics of today is reaching extreme levels. We, the people, “trust” our politicians and regulators. Often, the people calling the decisions have never had a real job (Fed), and they still decide on Trillions to be spent on various bail outs, backed often by century old theories of how the Economy works. Are we running out of ideas and simply reaching a deficit of thought? Must read by Sturdyblog;
As the World is focused on what’s going on in Europe, the US politics haven’t stopped. A great in-depth look at the current political environment in America, from the Occupy Wall Street protesters to the President’s reaction to the Republican Primary. Courtesy Omid Malekan. Must see video below.