Well, I did the best I could. You don't have a Frenceman running the show. Unfortunately, the compromise that had to be made put a French Canadian in charge. Now if you could do something for me and define what winning is...but wait! The Leader is speaking on the very subject tonight! It will soon be as clear as mud.
Spring break is over and Congress is back in town. We are promised Rep. Ryan's tax plan in a few short weeks which, hopefully, has incorporated many of the ideas of the Debt Commission to whom no one has paid any attention despite a pretty high powered publicity campaign conducted by the co-chairs, Billy's Boy and the Wing Nut. My guys within the Beltway tell me that the two are bubbly in public but pessimistic in private which is a real shame because as I have said before the only way we fix this thing is to raise more money and promote growth and the only way you do that is by a complete reformation of the tax code. Come next month, the U.S. will have the highest corporate tax rate among all industrial countries as Japan is poised to reduce their rates. Even 60 minutes kinda figured it out in a piece last night which, to mix netwok mataphores, was almost "fair and balanced," pointing out the loss of jobs and income as a result of our tax rates. Remember, it is just not a reduction in rates but a flattening of the code and the reduction or elimination of ALL "loopholes" and deductions to the greatest extent possible. We wait. The next few weeks are going to be a great deal more important than people realize.
Nothing much happened over in Euroland over the past few days; at least nothing good. Portugal spirals downward and the bickering continues. The Euro continues strong no doubt because of the near-promise of higher rates by M. Trichet and the continued belief in many quarters that we will in fact see something resembling a QE III simply because SOMEBODY has to buy the stuff the U.S. issues. My really smart friend, Larry, is traveling Piedmont drinking and buying Barolos so things must really be dull. So far we are not "Banned in Piedmont" as we are in China so maybe we can get some insight from him as to what to look for in the coming month or so. In the mean time, in some office, somewhere in America there is one gal or guy who has Conneticut, VCU, Kentucky and Butler in the office pool. Trust me, there is just ONE. Do you realize how much money that person is going to win?
Uneventful? From the FT:
ReplyDelete"Ms Merkel’s mighty Christian Democratic Union suffered a humiliating defeat in the southern state of Baden-Württemberg. The result – victory for the centre-left and environmentalists – could see a sorely weakened coalition in Berlin limping to the end of its term in office in 2013, with both CDU and the Free Democrats, its liberal junior partner, riven by internal divisions.
They may be unable to push legislation past a substantial hostile majority in the Bundesrat, the upper house of parliament where the 16 federal states are represented. If they lose one more state election in September, Ms Merkel could face a “blocking majority” of Social Democrat, Green and far-left Linke votes in that chamber."
If there is no real restructuring before the August holiday, we could again have an interesting fall as Merkel has no room to manuver left.
The simple reality is that if the Europeans do not burn the bondholders the Irish will burn the Europeans.
ReplyDeleteOne more from me, courtesy of Robert Preston at BBC:
ReplyDelete"The decision of Standard & Poor's to downgrade Portugal's sovereign debt to just a fraction above a junk rating will inevitably make it harder for Portugal to borrow in the coming weeks - when it will need to refinance more than €8bn of bonds that come up for repayment.
So in that sense, S&P's downgrade pushes Portugal nearer to crisis and the moment when it asks its eurozone partner countries for a bailout.
What is embarrassing for those partner countries is the main reason cited by S&P for the bailout - namely that eurozone leaders agreed last Friday that the new eurozone bailout fund to be launched in 2013, the European Stability Mechanism, will only lend on terms that will make it the senior creditor when it comes to repayment.
European Stability Mechanism loans will rank ahead of borrowings by eurozone sovereign states. So, by definition, the credit quality of any debt issued by a fragile eurozone country like Portugal - one deemed likely to tap the European Stability Mechanism - has deteriorated.
Which is why S&P felt it had no option but to downgrade Portuguese debt (and Greek debt too - and Ireland's debt will probably be downgraded later this week).
Or to put it another way, the understandable determination of Germany in particular to minimise losses when rescue funds are actually provided, and also to punish reckless sovereign borrowers, has had the effect of making it more likely that Portugal will have to tap the eurozone and the IMF for emergency funds (as Ireland and Greece have already done).
In other words, the reward of German prudence is that German taxpayers are now even more likely to have to bail out their Portuguese neighbours."
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/03/germany_pushes_portugal_nearer.html