The Daily DOOM

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Has the EU, ECB, IMF, and Greece finally -- at long last -- come to terms on the latest bailout package? It won't work, of course; Greece is simply not capable of achieving the present cuts nor the future productivity it would take to get themselves out of this hole. I also suspect that the Greeks themselves won't stand for it; they'll elect a new government that will repudiate the deal and that will be that. (I'm still not sure how this isn't a default, and why it wouldn't trigger CDS contracts. I guess it's just a matter of everyone playing "let's pretend" for a while longer.) UPDATE: More on this from Fox News.

Having run out of other people's money, Spanish socialists pour into the streets to protest. This is very much according to historical precedent. Socialists are neither very smart nor sensitive to irony, but give them this: they are consistent.

The upside of government default.

Today, there is a good chance that the U.S. government, like the state governments of the 1840s, will be forced to default on its explicit and implicit promises within the next few decades. Exactly how and when is less certain. But the fundamental and massive budgetary changes required to prevent a fiscal crisis are politically unimaginable. Perhaps only default can impose the necessary fiscal discipline. Fortunately, the state government experience of the 1840s suggests that this may provide the best and most durable long-run solution.

A shortage of tires - another sign of a possible dip back into recession territory?

Even an Ivy League degree is no guarantee of a fat paycheck any more -- the "signaling" effect of a higher-education degree no longer carries the same power it used to. STEM majors can still depend on good job prospects post-graduation, but Fine Arts, Women's Studies, and French Medieval Poetry majors may find it tougher sledding.

I've long thought that entitlement program reform will not be undertaken seriously until events force it upon us...and signs are that this time is now at hand, especially for Medicare. Reality will impose fiscal discipline in one way or another, as it always does.

How can gas prices be spiking if demand is actually shrinking? Some of this is a combination of external factors: the situation with Iran, a lack of refining capacity, a switchover between winter and spring gasoline blends, taxes, and so on. But none of this is actually an indicator of increased economic activity -- in fact, it points to exactly the reverse.

Victor Davis Hanson: Ten new Commandments for His Majesty's brave new Socialist Republic.

Is a move to a defined-contribution plan like the 401(k) in the works for the American military? The government's parlous financial situation might force their hand, but it would probably be a good idea regardless -- soldiers could accrue their own savings and take the money with them if and when they leave the service, rather than getting a heaping helping of nothing if they separate before they have twenty years in.

Walter Russell Mead: The Great American Impasse.

My concern is that the costs of living the way we want to live are rising faster than our ability to pay for them. That was true even before the current bout of bad economic times and it will be true even when it is over. It’s an unsustainable edifice; the termites are eating the foundations of our house and the answer isn’t to add another story to this rickety building.

"As far as I am concerned, [John] Rawls is the Regis Philbin of political philosophy." Thank God I'm not the only one who thinks so.

South Carolina's estimated public-sector pension shortfall? A mere $13 billion. (Rep. James L. Petigru said of South Carolina back in the Civil War era: "South Carolina is too small for a republic and too large for an insane asylum.")

S**t just got real in Riverdale.

The Great Repression.

Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of “financial repression”. Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between governments and banks … Low nominal interest rates help reduce debt servicing costs while a high incidence of negative real interest rates liquidates or erodes the real value of government debt. Thus, financial repression is most successful in liquidating debts when accompanied by a steady dose of inflation.

Bob "The Bear" Janjuah brings the DOOM.

posted by Monty at 08:40 AM

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