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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (115187)	6/12/2012 11:02:39 AM
From: RetiredNow	Respond to of 149317

Great summary. Here's my summary: * Toxic assets are the norm for European banks and many of the largest banks are insolvent in reality, if all assets were marked to real value => So the Sovereigns are asking the ECB to bail out the banks, but the ECB doesn't have the firepower to do it => So the Sovereigns are lending money to the ECB to bail out their own banks => But the Sovereigns themselves are in serious trouble running massive deficits and incurring massive debts => So the large European banks are buying up the Sovereign debt to keep them going You see? It's a giant circle jerk...otherwise known as a Ponzi Scheme. We're doing much the same thing here in the US. The only thing that makes us different is that we ultimately just print more money, which is a technical default of the debt. There are three ways to deleverage: 1) default on it...don't pay it back 2) technically default on it, by printing money and paying it back with cheaper dollars 3) pay it back We're choosing option 2, which is probably the best option given our massive debt and our reserve currency status. The Europeans are going to have to give the EU the power to do the same thing. Otherwise, they'll have to continue doing option 3, which results in the need for massive austerity in the short run. Now, the truth is that option 3 is the most painful, but it is also the most direct route to solving the problem once and for all. Option 2 is much less painful in the short run, but sets the country up for much slower growth over a longer period of time. So let's see which the Europeans choose going forward.