Monday, May 21, 2012

G8 Summit: Send in the clowns!

Is this what failure looks like?
G-8: If empty rhetoric represents solutions, then the Summit at Camp David this weekend was a great success!

G8 leaders, all Eurozone members, Congress, lend me your ears! Austerity or growth, that is the question?

At this stage of the Eurozone crisis Greece is teetering on the edge of a cliff, looking more like the Priceline bus that ends up going over and crashing and burning, than country. Similarly, Italy and Spain are inching ever closer to the same precipice.

In the spirit of this "Greek Tragedy" that potentially awaits us, I have invoked a combination of two different Shakespeare works, Hamlet and Julius Caesar.

One might logically think that at this point the G-8 leaders would have some idea or consensus as to the best way to proceed to stave off a full-blown global financial meltdown. Listening to the statements issued at the end of the G8, it would seem that sadly they do not!

This ignorance to a solution this far in is a scary indication that indeed there is no known methodology to get out and that crap is globally being thrown against the proverbial wall to see what sticks.

A move towards economic growth as some advocate would mean the injection of more stimulus and an increase in debt which of course has not worked in the past, while for those who support implementation of additional austerity measures, it would mean pain and likely rioting in the streets which no one, particularly politicians, wants to see.

To an extent the discussion about the EU mirrors that in the United States where one political side calls for quantitative easing Part ? and the other side demands that any QE has spending cuts included.

Like the EU leaders, Federal Reserve Chairman Ben Bernanke is limited in what he can do to solve the problem, and he too continues to throw the US brand of crap against the wall to see if something works. To date QE and Operation Twist have not!

In the US, with interest rates currently near zero, what would an injection of more money actually do other than potentially help the stock market although such a demonstration of desperation may serve to keep investors on the sidelines.

I don't envy these leaders as they are in a damned if you do, damned if you don't position, but they knew what they were signing on for when they ran for office. Some, like Barack Obama, are up for reelection now and will try to shift responsibility and blame for the current mess elsewhere and onto other people.

Do not be fooled! Being an incumbent means that the glory or the blame stops at your door!

At the end of the day these politicians will bend over backwards to make decisions based not necessarily on the probability of success, but on the impact to their staying in or of attaining office.

And when it's all over who will have paid the ultimate price? You guessed it, us!

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