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6/28/12

The market is down this morning as the European Leaders begin their meetings in Brussels.  France’s Hollande is attending his first summit.  He told reporters “I have come here to get very rapid solutions to support countries in the greatest difficulty on the markets even though they have made considerable efforts to restore their public finances.”

Italy and Spain are under pressure in bond markets and want the European Central Bank (ECB) to intervene in markets to push interest rates lower.  The EFSF and ESM are the big pots of money that have weak countries salivating.  There is $625 billion dollars available between the two funds.  That is enough honey to bring out animal instincts!

Unidentified European Union sources told Reuters that an agreement could be signed on Friday if details were worked out today.  That makes it sound like a done deal.  It is not.  Germany is not worried about higher interest rates for Italy and Spain.  A government official said “We would warn against exaggerated panic-making.”

Germany insists that fiscal reforms to sovereign budgets and fundamental reforms that allow European authorities to override national economic policies and budgets must come before there is shared liability for individual country’s debt.

France, Spain and Italy want the money first then talk about the reforms.

Dutch Premier Rutte told his parliament “It’s crucial for us to avoid taking measures that would ease pressure on Southern Europe to reform.  That is why I seriously question a rapid transition to a banking union, or Eurobonds.”

All of the press seems to focus on Germany’s stubborn refusal to loosen their purse strings.  Unsettled markets are not caused by Germany; the controversy is being instigated by France’s Hollande.  The credit problems in Ireland, Portugal and Greece were handled before he came to office.  Governments had to commit to austerity measures to bring their deficit down in order to receive a bailout.

Hollande does not want this discipline because he fears France will be in the cross-hairs of bond vigilantes before long.  He is a socialist and wants to spend more money.  He has already granted early pensions and increased minimum wages.  He needs money to institute a “growth” program.  France is broke and needs to get their hands in someone else’s pocket.

To fulfill his campaign promises he needs Germany to loosen the purse strings.  This would allow “soft” support for France in credit markets.  Eurobonds and support for banks would isolate France from the marketplace.

We don’t expect good news out of Brussels tomorrow.  They won’t be singing Kumbayah.  We expect next week to be a tough week in the markets.

This morning the Supreme Court paved the winding path to more socialism the United States has been on for the last 100 years.  To many limousine liberals it feels good to know we are going to do all we can to help the weakest, slowest and least likely to contribute.

My religious teaching and beliefs have instilled these values in me.  I just never knew I was going to be forced to worship at the Washington alter!  Sadly rather than teaching a man to fish, so he could provide for himself for a lifetime, we have taught him to stand in line for free fish.

This morning, the 32,000 member British Medical Association (BMA) voted to go on strike because of a nasty pension dispute.  According to the Guardian, the doctors took “industrial action” last week that denied operations and appointments to ‘tens of thousands of patients.’

As government agents, the British doctors will maintain emergency services as they slow work to get the politician’s attention.  The British government has angered the doctors with plans to force them to work to 68 years old, increase their pension contributions and lower their pension pay.

If you are buying hospital stocks this morning because you think it will be good for them to have the government more involved in medicine…remember how well the government runs everything else.  When costs escalate beyond the bureaucrat’s spread sheet projections, where will they turn to cut costs?

Will you transmit my blood pressure directly to the IRS?

Many have recounted the ineptness of government.  I won’t pile on here, it is unfair.  Contemplating the government’s deeper involvement in my family’s healthcare makes me angry.  Our family doctor is a friend of over 30 years.  My daughter is applying for Medical School because she wants to help people.  He is going to quit and my daughter is upset.  I feel sorry for both…and all of us.

Quote:
Democracy is an excellent form of government where if you can cobble together 51% of the people, by promising them other people’s stuff, or scaring them that you’ll take away their stuff, you can rule as a dictator. It is decidedly not the form of government originally chosen by the United States of America, which is a constitutional republic with limited government. Thankfully we’ve mostly done away with that nonsense!—Cliff Asness

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