Gloom, Despair, and Agony On Me!

The G20, meeting in Busan, South Korea, failed to reach a consensus on how to deal with the ongoing financial crisis. Geithner & Co. want everyone to focus on their domestic markets rather than relying on exports to drive their economies (Keynes forever, baby!). But European leaders are balking -- mainly because most of them cannot grow their economies by focusing on their domestic markets. Germany is a good example: their economy, like China's, is founded on exports. Take away the export market and the German economy collapses. The Europeans are also right in the middle of a huge headache caused by a decade of profligate spending, and they're in no mood for a "hair of the dog" speech.

Germany, in fact, may be precipitating the fall of the Euro sooner rather than later. Der Spiegel is reporting that the German Federal Constitutional Court may block Germany's portion of the EU bailout package (via ZH), which would basically sink the whole thing. I think Germany is simply positioning itself to leave the Euro and go back to the Deutschmark -- many Germans were against the Euro project from the beginning, and being told that they have to bail out their more profligate neighbors is causing a massive political backlash.

Meanwhile, back on our own shores, Commodore Bernanke of the USS Keynes says: "Ramming speed!" And in a bit of (surely unintentional) hilarity, Bammer's vaunted Debt Commission is broke. Remember: the first time is tragedy, the second time is farce. The Depression was a tragedy, so this must be the farce.

Unsurprisingly, the futures for the Dow and S&P 500 are down as of this writing. The Euro took another shot to the nuts: it's sitting at $1.19 against the US dollar, and is almost sure to fall further given the failure of the G20 talks.

posted by Monty at 08:31 PM

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