The heart of the problem is that the Europeans are just that....Europeans, i.e., a loose confederation of states with a common currency. The looseness of the confederation means that there is no common interest to be asserted whenever a financial crisis hits, unlike the US which was able to act decisively (I did not say wisely, I said 'decisively') when it faced its calamity.
The Europeans are playing musical chairs while passing around a hot potato, the object being to be sitting down with no burning spud in hand when the music stops. We are all familiar with 'beggar thy neighbor' monetary policies, but the Euros are playing it with a vengeance among themselves.
This is why we see so much dithering, so much talk, so little action, and why the potential for disaster in Europe is far, far worse than would otherwise be the case. There is no Paulson getting on his knees before Pelosi begging for money to keep things from going ot hell, simply Sarkozy trying to see if he can outwit Merkel, and Merkel doing the same with regard to the Italians and Spaniards, while the Greeks spin more and more lies and promises of austerity.
The object is no longer to save the Greeks but to save the EU and the Euro for I think that if Greece defaults, the premise behind the EU falls apart. Greece is the hole in the dike, and it must be kept plugged as its failure means the end of the Euro. Interesting how the Greeks hold so much power over things.
This is the essence of the problem. There has been plenty of time to deal with the issues, but the failure to be decisive may well cause things to get much worse than anyone thinks.
As far as gold is concerned, I have not bought and not sold. Just not a good market timer The flight to safety to the USD is crazy, its purported safety is a chimera.
There must be some very substantial CB manipulation of gold but it is unlikley to succeed in the long run. |
