Greece, another Too Big to Fail Entity

This is the latest addition to the long list that started in late 2008.  One can debate for a long time as to what would have happened if no entity had been saved including any bank.  There is no doubt in my mind that the crash would have been much deeper and in the long run after all the pieces had been put back together the world would have been on more solid footing than it is today. 

 There is a big difference in bubbles, stock market bubbles involve a lot more real money than housing bubbles which are financed with borrowed money, mortgages.  If there had been no bailouts the entities that had loaned all the housing money, and guaranteed it, would be gone.  Even no more Goldman Sachs.  From the start it was obvious that the Government was inclined to save some enties, remember all you Tea Partyer’s, this was even before Obama.  So where does one stop once you save just one entity?  This is the mindset that is fueling the current stock market, there really is a free lunch, just as Greenspan outlined years ago. 

Now we have a consumer who in aggregate has no equity as a household.  The stock market has been rallying because the companies got rid of a lot of workers due to a big drop in final demand.  The government has tried to hold the boat together in the midst of all this chaos and now the rallying cry is to reduce deficits, sorry, that doesn’t happen until you reach bottom and we are not there, not even close.

John Mauldin, who we have links to on this site, in the past few weeks has outlined some key issues, you should read them.

As to the current market, the blow-off stage started on 2/22/10 and appears to be long in the teeth.