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Our major focus today is on the debt crisis in Europe. A WSJ op-ed starts us off.
… At the end of the G7 meeting in Canada last weekend, Treasury Secretary Tim Geithner told reporters, “I just want to underscore they made it clear to us—they, the European authorities—that they will manage this [Greek debt crisis] with great care.”
But the Europeans have not been careful so far. The issues for troubled euro zone countries are straightforward: Portugal, Ireland, Italy, Greece and Spain (known to the financial markets, and not in a polite way, as the PIIGS) had varying degrees of foreign- and bank credit-financed rapid expansions over the past decade. In fall 2008, these bubbles collapsed.
As custodian of their shared currency, the European Central Bank responded by quietly opening lifelines to all these countries, effectively buying government bonds through special credit windows. Europe’s periphery was fragile but surviving on this intravenous line of credit from the ECB until a few weeks ago, when it suddenly became apparent that Jean-Claude Trichet, president of the ECB, and his German backers were finally lining up to cut Greece off from that implicit subsidy. The Germans have become tired of supporting countries that do not, to their minds, try hard enough. Investors naturally flew from Greek debt—Greece’s debt yields rose, and its banking system verged near collapse as investors and savers ran from the country.
But it’s not just about Greece any more. …
Niall Ferguson is next with a piece from the Financial Times.
It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate. …
Paul Johnson wrote in Forbes about the mistakes made by the U. S. and the U. K. following current Keynesian nostrums.
… However, the European Union, led by Germany, proved reluctant to tread the Keynesian road and shoulder vast burdens of government debt. The result of this decision can be seen in the rise of the euro against the dollar and the pound and in the fact that Germany and France are now pulling out of recession.
China and India declined to go for a full-bloodied Keynesian solution. Their economies have continued to expand, if more slowly than before the crisis, and both are in a strong position to exploit the new decade’s opportunities. China has notably narrowed the gap between its economy and that of the U.S.
Meanwhile, the U.S. and Britain are still deeply mired in recession, having acquired a vast amount of new government debt to no constructive purpose. No amount of juggling with unemployment figures can obscure the fact that in both countries real jobs are still being lost and that the creation of phony government ones is not altering the drop in family incomes. The public senses the truth, and the signs point to voters taking a fearful revenge on the Keynesian “miracle workers.” …
Jake Tapper notes Obama just signed a bill into law with no fanfare; no bells and whistles; no fellow conspirators waiting around for a pen.
Behind closed doors and with no cameras present, President Obama signed into law Friday afternoon the bill raising the public debt limit from $12.394 trillion to $14.294 trillion. …
Peter Schiff explains why values of asset classes are moving in tandem.
Over the past three or four years a strange phenomenon has developed in the global investment markets. With some exceptions, many asset classes, in particular domestic and foreign equities, commodities, and foreign currencies have tended to move in the same direction on a day to day basis. The mega-correlation has lasted so long that most now take it for granted. This leaves investors with relatively simple choices: when to get in to the market in general and when to park assets in cash and U.S. Treasuries.
However, few recall that this pattern is relatively new in the annals of financial history. Fewer still realize the reason for the current anomaly. From my perspective the most logical explanation is fear, which has become global, pervasive, and persistent. …
Caroline Baum from Bloomberg News looks at small business attitudes.
… “Stay out of our way,” says Sherry Pymer, vice president of Pymer Plastering Inc., a 124-year-old family owned business in Columbus, Ohio. She sounded more like an Ayn Rand hero than a woman dealing with a payroll, unemployment insurance and Ohio’s commercial activity tax. “We don’t want them bailing out banks and big business. We want them to go away with their mandating and meddling and return this country to the principles it was founded on over 200 years ago.”
We’re a long way from the Founding Fathers, that’s for sure. The handful of small-business owners I talked to across the country are about as close to the entrepreneurial spirit as it gets. They all had one implied piece of advice for Washington: Less is more. Specifically, you do less — and get your fiscal house in order — and we’ll do more, Henderson says.
And as for the closing of the federal government this past week due to weather, these small-business owners had one wish: more snow.
Mark Steyn alerts us to Phil Jones, head of the infamous Climate Research Unit (CRU) at East Anglia University, saying there’s been no warming since 1995. More on this tomorrow.
Say it loud, he’s unsettled and proud. Hide-the-decliner Phil Jones is embracing his inner decline:
“Climategate U-turn as Scientist at Centre of Row Admits: There Has Been No Global Warming Since 1995″
That would be 1995 as in a decade and a half ago? Gee, you wouldn’t get that impression from reading the papers. …
Now that it is increasing clear we’ve been lied to for years, thank God some of the more idiotic green initiatives never passed. David Harsanyi says the founders of our republic wanted our country to be hard to govern.
If you’ve been paying attention to the left-wing punditry these days, you may be under the impression that the nation’s institutions are on the verge of collapse. Or that the rule of law is unraveling. Or maybe that this once-great nation is crippled and nearly beyond repair.
You know why? Because the 40 percent (or so) political minority has far too much influence in Washington. Don’t you know? This minority, egged on by a howling mob of nitwits, is holding progress hostage with their revolting politics and parliamentary trickery.
Leading the charge to fix this dire problem is New York Times columnist Paul Krugman, who advocates abolishing the Senate filibuster to make way for direct democracy’s magic. …
Ilya Somin blogs on snow storm entrepreneurship and seasonal property rights enforced without government.
The massive “Snowmageddon” snowstorm is a good time to consider this interesting 2001 article about snowstorms and parking space property rights by Northwestern University law professor Fred McChesney [HT: Alex Tabarrok]:
“Before snowfalls, a parking space belongs to the one who occupies it: you leave it, you lose it. In wintertime Chicago, however, excavating one’s car changes the system of property rights. Once car owners dig themselves out of their snow cocoon (Chicagoans carry snow shovels in their trunks for this), they claim the place they cleared as their own. How? Diggers routinely place lawn furniture, buckets, two-by-fours, bar stools, orange highway construction cones and other markers in the space they have just dug out. That means the space now belongs to the excavator. When he leaves, the markers dictate that the space must sit empty until the owner returns. “People do look at these spaces as their own property,” a local law professor comments.
The space belongs to the original snow-mining engineer until the snow melts along the curb. Woe betide anyone who would take that space while its owner is away. Others in the neighborhood—who have undertaken similar excavations and staked out their own spaces—will protect the space for its absent owner. Broken windows, scratched paint, deflated tires and other punishments often follow parking in a space designated by whatever debris marks the excavator’s property….”
If you have been paying attention, you might have noticed Camille Paglia has not graced our pages since November. She explains why.
The inventor of the Frisbee has passed. WSJ has the obit.
Dilbert says products that don’t work are the causes of our economic problems.