No Reason to be Negative
That is all we heard the past few days on CNBC. In fact on the micro level I couldn’t see anything negative myself. Most of the earnings have been decent, especially any company that uses cheap Asian or Chinese labor.
On the macro level however the markets have seemed to be focused on the European bailout with a lot of references on the stimulus for the world economy that will be the result of the bailout. I guess I think that Germany wants the Euro to survive in the end but it is very messy getting there.
The big concept that I believe one needs to get their hands around is the fact that the worst thing one can do with borrowed money is to use all of it to pay off old borrowed money which is what the European Austerity plan entails. This is a lot like filling one hole and digging another and is a lot like the Paul Ryan Austerity approach which the Republicans and Tear Partiers endorse. Without using part of any borrowings to stimulate growth we are all headed for the cesspool.