Sunday, May 30, 2010

Silliness about the Eurozone

Why, when there is a problem, do people think there is some quick fix. Is it supposed that investors are stupid? Investors can see that Europe is broke and that there is no way to "grow out" of their indebtedness. Since they can see this, investors are beating a path to the exit. Who wants to own sovereign debt when you know that the borrowers cannot ever pay you back? Simple arithmetic, melded with modern demographics, make it clear the Eurozone is financial toast. There is no way short of bankruptcy for Europe to expunge it's enormous debt. The question now is only how big the bankruptcy will be and who will get stuck holding the bag. There really aren't any other questions worth asking. And there is no quick fix.