Rising Panic

Those Straws Look Pretty Strong To Me

Some times you just have to shake your head.  The truth has become stranger than fiction.  When it gets this bad, you really have to wonder whether panic is starting to set in. 

Cue Alan Greenspan.  He has been quoted as saying that there is absolutely zero chance of a US default upon its debts.  Why?  Well, the US can always print money to pay back the debt.
 

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press.

Now technically that is true.  But at what cost?  Weimar or Zimbabwe levels of inflation--that's the cost.  It is merely default by another means.  We owe you money, so we will print lots of it, and pay you back with debased coin.  Meanwhile, the price of a loaf of bread goes up to $500 dollars, and rises every day (no pun intended).

But at least there will be hot employment opportunities for guys in supermarkets going up and down the aisles putting new, higher, price stickers on food every thirty minutes.  Its called "monetizing the debt" which is economics-speak for legalized theft on a grand scale.  Its end is universal social dislocation and economic collapse.  And then comes the riots and the armed insurrection.   

But in the strange rarefied world of Alan Greenspan, apparently the same printing press "solution", fiat money creation world does not apply to Europe. 

Greenspan said the current sense of crisis that has unnerved investors is about the euro zone, not the US.  'The United States was actually doing relatively well, sluggish but going forward until Italy ran into trouble," he said. "That destabilized the European system, and the crisis re-emerged. Europe is very critical to the United States in the sense not only do we have a fourth of our experts there, but more importantly, significant proportion of the foreign affiliate profits, in fact half of U.S. corporations, are in Europe." 

"When Italy showed signs of significant weakness in selling its bonds—the yield is now over 6 percent, which is an unsustainable level—it created a massive problem within Europe because Italy is a very large country, cannot be easily bailed out and, indeed, cannot be bailed out," Greenspan added.

Strange.  Printing money is a wonderful and effective defence against default in the United States, but for some reason it will not work for Italy.  Why, one wonders?  Surely, they having printing presses in Europe.  They invented the thing in the first place.  

When normally sane and very experienced men become so incoherent and self-contradictory one wonders whether it is a rising tide of panic which is making straw-grasping suddenly seem like a compelling argument. 

We fear so.