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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (111096)	4/29/2010 12:22:43 AM
From: Hawkmoon	1 Recommendation Respond to of 116555

Sound familiar? Sure does.. The difference is that in Europe they have a bunch of nation/states trying to act in a concerted manner while maintaining their financial and economic independence. They cooperate only where they see a parochial interest and benefit. In the US we have provincial states that are bound together under a constitution. That provides significant financial unity in backing our sovereign from attack by financial speculators. It's not 100% impossible that we might see a financial civil war where better managed states rebel against financing the more poorly managed ones, but it's far more likely to see such rebellion amongst states in a confederation like the EU. It's far easier to see CDS speculators targeting the debts of the PIIGS when it's not clear that the more economically powerful EU states are willing to provide financial "horsepower" to thwart such speculation. In the US, what we see, IMO, is a Federal Government which is more than ready to assert it's power into the affairs of the states And Federal bureaucrats constantly look for the means to blackmail state governments into giving up more of their sovereignty to the federal government. And they are more than willing to use tax revenues from the other states to accomplish that. I'm not sure the EU has the same ability to tax each individual state's citizen since they have no taxation authority. If you're going to prepare a battle plan to fight CDS speculation bashing your sovereign debt, you'd better have a big war chest to work with. Hawk