Dumb and Dumber
Global financial markets continue to undergo wild gyrations as politicians on both sides of the Atlantic appear intent on doing their very best to make bad situations in the E.U and U.S. even worse.As to which group is “Dumb” and which is “Dumber”, I’ll leave it up to you to decide . In my opinion, it is pretty much a dead heat between the two. The U.S. debt debate is playing out (at least so far) pretty much as we expected. The first deadline for agreeing to raise the debt ceiling back in May was ignored, causing the U.S. Treasury to come up with some account juggling in order to extend the timeline for an agreement to August 2nd, 2011. Incredibly, with only 2 weeks to go until the Government of the United States is forced to start choosing which bills not to pay, both parties are sticking to their ideological ground and remain almost as far apart as when they started negotiations 4 months ago. That, in our view, is just plain dumb. Meanwhile in Europe, markets have now waited over 18 months to hear how the EU will deal with the obvious insolvency of an EU member state – Greece. While the politicians have bickered and dithered for more than a year over how to handle the grass fire on the back lawn (Greece), the front lawn (Portugal), garage (Spain) and now the main house (Italy) have all caught fire. This in our opinion was also pretty dumb, and unless the U.S. surprises us, will probably ultimately be viewed as actually being even “Dumber” than what has occurred in Washington.