Simple Question, Not So Simple Answer

2010 May 26
by drdog09

The Question:

Should the US participate with the IMF to assist in propping up the Euro?

The Answer:

The short answer — No.

For those that care, here’s the longer one. It boils down to politics not economics by the way.

Scenario 1. The Fed at the urging of the President partners with the IMF to pull together a second rescue package (surely you did not think $925Bn was the end?) to give Greece at the end of next year the resources to mount an austerity program. Doing so props up the Euro and our number one trading partner trundles on.

Soon after that package is completed, California is triggered into a running default as agency after agency runs out of cash. California applies for relief from the Federal Govt. for their own ‘IMF’ package but are stiff armed by the Senate.

Scenario 2. The Senate passes a resolution, House concurs that no funds are to be used to prop up external currencies. The Euro falls to an all time low of 1:2 against the dollar. Trade ceases and we all head for another major recession.

The Senate offers a resolution of support for State funding relief. The House cobbles together a loan surety program for ailing States. We somehow muddle thru even without viable European trade.

If one were an economist, the safe bet would be scenario 1 even with California being the 8th largest economy in the world. Europe is bigger still. But, if you are a US citizen who wants to keep the home fires burning, scenario 2 is the place to be. There is not a politician yet that does not know you keep the hometown folks safe or you’re toast.

Bailing out the Euro while in the same instant stiff arming a State would be political suicide. So either the Pols better be prepared to fund both entities or go with scenario 2. I just don’t think the Chinese have the cash to want to do both options. Oh, you thought I was discussing US politicians. We passed the point this year that US Pols have any control of our debt. That is in Beijing’s hands now.

64 Responses leave one →
  1. 2010 May 26 11:04 am
    MI Conservative permalink

    The Question:

    Should the US participate with the IMF to assist in propping up the Euro?

    Hell no, I need a good exchange rate to afford a beer when I get to Garmisch!

  2. 2010 May 26 11:11 am
    wildernesstea permalink

    Wow, that a site called Be John Galt even poses the question is stunning. Stunning!

  3. 2010 May 26 11:30 am
    justrand permalink

    splendid, my green friend!! 🙂

  4. 2010 May 26 12:34 pm

    Chances the president will get this question tomorrow: Zero.

  5. 2010 May 26 12:59 pm
    drdog09 permalink


    Yep, zero. Even if posed, it would fly right over his head.

    Now the CongressCritters, one or two of them ought to have a clue. Because the political risks if they pick option 1 are politically terminal for them.

  6. 2010 May 26 1:02 pm

    MARKET CLOSES BELOW 10,000 @ 9972


  7. 2010 May 26 1:13 pm
    mulletover permalink

    The correction is complete.

    Well, maybe not so much.

  8. 2010 May 26 1:16 pm

    7. If the EURO continues to fall, the market bottoms to 8,000

  9. 2010 May 26 1:34 pm
    retlaw permalink

    “Just close the damn hole”.

    Was the “Annointed One” talking about

    A. the BP oil rig spill
    B. the US/Mexican border
    C. the financial problems in the US budget
    D. an inside source leak concerning the “Sestak-was-offered-a-job-as-a-
    E. in reference to VP Joe Biden’s continual spoken gaffes

  10. 2010 May 26 1:41 pm

    6 – What’s this going too stuff… I thought we were there already?

    HT: phoenixrisen

  11. 2010 May 26 1:42 pm

    China not investing in Euro Bonds.

    Also check this out from MN of all places.

  12. 2010 May 26 1:43 pm

    ““Just close the damn hole”. Was the “Annointed One” talking about”

    Queen Pelosi’s snatch????

  13. 2010 May 26 1:43 pm
    Federalist permalink

    #8 8000??? 8000??

    Try somewhere between 3500 and 4000. If the Euro collapses so goes the dollar. The vice versa applies as well.

    There is nothing keeping the market where it is in the first place except gov’ts pumping in cash the is backed up by nothing except hope and change.

    Prediction Bread Lines and tax riots in all major cities by late fall 2010

  14. 2010 May 26 1:50 pm

    “Queen Pelosi’s snatch”

    that’s a really really bad visual

    Must clear mind

  15. 2010 May 26 1:52 pm

    14. Boing!

  16. 2010 May 26 1:53 pm

    13. If the Dow plunges to 4000 we have the second great depression.

  17. 2010 May 26 1:53 pm

    Feds Issue Terror Watch for the Texas/Mexico Border

    By Jana Winter


    The Department of Homeland Security is alerting Texas authorities to be on the lookout for a suspected member of the Somalia-based Al Shabaab terrorist group who might be attempting to travel to the U.S. through Mexico, a security expert who has seen the memo tells

  18. 2010 May 26 2:08 pm

    Headline – CHINA MAY SHIELD NKOREA – Drudge
    Link to bloomberg that drudge used now has no story – data there. hmm

  19. 2010 May 26 2:10 pm


    Why not, they know they have a wussie in the WH.

  20. 2010 May 26 2:18 pm

    4sure; If china was really ballzy they would just go for tiwan

  21. 2010 May 26 2:18 pm
    JustMary permalink

    The Department of Homeland Security is alerting Texas authorities to be on the lookout for a suspected member of the Somalia-based Al Shabaab terrorist group who might be attempting to travel to the U.S. through Mexico, a security expert who has seen the memo tells


  22. 2010 May 26 2:21 pm
    TLS permalink

    #21 Isn’t that profiling?!?

  23. 2010 May 26 2:22 pm
    justrand permalink

    KH: “If china was really ballzy they would just go for taiwan”

    …that’s coming soon, REAL soon I’m afraid

  24. 2010 May 26 2:26 pm
    justrand permalink

    O/T, if I lived in NY city I would open a “Honey-Baked Ham” store on one side of the mosque planned for the 9/11 site, and a “Victoria’s Secret” on the other. Then I’d hire scantilly clad women to walk back and forth in front of the mosque passing out Bibles while munching on ham sandwiches!

  25. 2010 May 26 2:26 pm

    24. HEH-a-rooski !!!!

  26. 2010 May 26 2:31 pm

    BTW why do I get the feeling this sudden border terror alert is semi-manufactured to justify the 1200 NG troops, so that he doesn’t have to admit there is a illegal immigration\criminal overflow problems and HE WAS WRONG.

  27. 2010 May 26 2:32 pm

    24. Just,

    The store’s motto???

    “Fresh Ham and Fish served daily”

  28. 2010 May 26 2:33 pm
    drdog09 permalink

    I predict that once the mosque is completed someone will crash a light plane into it.

  29. 2010 May 26 2:37 pm
    JustMary permalink

    Is the LAT trying to make me want to start reading them on my own without being referred by a juicy title? This story makes the total number of minutes I spent not loathing them this month abnormally high, especially on the heels of this gem. It is giving me a complex.

  30. 2010 May 26 2:40 pm
    JustMary permalink

    #22 I believe it is. The need to focus on the real dangers…….nuns, old people in wheelchairs eating applesauce, and babies. The need to send some airport security personnel to the border to show them how it’s done.

  31. 2010 May 26 3:44 pm

    28 – I hope so. Yes I do actually hope so.

  32. 2010 May 26 3:44 pm

    Second confirming sample
    CA(Magellan Strategies(R))

    Whitman: 54%
    Poizner: 19%

    Fiorina: 44%
    Campbell: 21%
    DeVore: 14%

  33. 2010 May 26 3:47 pm

    31 -If she sat on my car i’d raise the antenna, that is if it wasn’t rising on it’s own already.

  34. 2010 May 26 3:51 pm

    The other Bauer

    Must be waiting on an anwser from Mao on the CessGate matter.

  35. 2010 May 26 4:04 pm
    Havok permalink

    You Kalifornia residents better brush up on your Chinese. They will only keep the good slaves around who can speak their tongue.

  36. 2010 May 26 4:08 pm
    justrand permalink

    I’m no good with languages, Havok…I better just shoot ’em! 🙂

  37. 2010 May 26 4:34 pm

  38. 2010 May 26 4:39 pm
    TLS permalink

    #38 funny, but true! I think I’ll forward that to some people.

  39. 2010 May 26 4:41 pm
    JustMary permalink

    #38 YESSSSSSS!!!!! LOL!!!!

  40. 2010 May 26 4:47 pm
    justrand permalink

    #38…”embarrassed”? to have voted for The One?? Golly…now why would anyone feel that way???

    [I’m shamelessly angling for a window bunk in Hut 1369]

  41. 2010 May 26 4:50 pm
    JustMary permalink

    There will be poetry night this Friday, and the theme will be Chris Christie is the freaking awesomest person ever or something. I’ll clean up the title a bit, but he is the theme. 😀

  42. 2010 May 26 4:56 pm
    justrand permalink

    JM, and we expect BIG things out of our poets, eh?

  43. 2010 May 26 5:01 pm
    JustMary permalink

    Just more to love. 😀

  44. 2010 May 26 5:16 pm
    TLS permalink

    #42 wooo, whooo!! I’m in!

  45. 2010 May 26 5:16 pm
    mulletover permalink

    What rhymes with doughnut and tasty cakes?

  46. 2010 May 26 5:18 pm
    TLS permalink

    no nuts and political fakes!!

  47. 2010 May 26 5:33 pm
    JustMary permalink

    #47 Christie’s great….gives us the chocolate cake…… (apologies to Bill Cosby)

    I’ll have to work on the doughnut rhyme….

  48. 2010 May 26 6:19 pm

    Some thought of him as one of the wingnuts,
    Or just a muncher of the doughnuts,
    But the rotund one from New jersey,
    Whom some may have called an overstuffed guernsey,
    Proved in the end, that they were the numbnuts.

  49. 2010 May 26 6:31 pm
    mulletover permalink

    Excellent, IP.

    On to the scene of political fakes
    Came the real deal muncher of tasty cakes
    Christie’s good government pledge
    Gave him the keen edge
    To rid us of all the tax-raising rakes.

  50. 2010 May 26 6:35 pm
    justrand permalink

    IP & mullet…AWESOME!! you guys gotta transfer those to the thread on Friday!! 🙂

  51. 2010 May 26 6:38 pm
    JustMary permalink

    Those were great! BTW- I haven’t forgotten about you, IP…..I ordered a 10 pack of the booklets and they haven’t arrived yet. I assume they are backordered because of demand.

  52. 2010 May 26 6:54 pm


  53. 2010 May 26 6:56 pm

    I shant be here on friday, alas and alak.

  54. 2010 May 26 6:59 pm
    JustMary permalink

    I ordered pocket Constitution/Declarations a while back, one of which was for you.

  55. 2010 May 26 7:01 pm
    JustMary permalink

    Who is able to make it? I can always do it next week, or Saturday instead.

  56. 2010 May 26 7:01 pm

    ah soooo ~~~ 🙂

  57. 2010 May 26 7:02 pm

    Friday is usually my poker night elsewhere, but let that not disuade you .

  58. 2010 May 26 7:03 pm

    42 – Careful, you start holding him up too high and he’ll start disappointing you. 😉

  59. 2010 May 26 7:10 pm

    MYFOXNY.COM – New York Assembly Speaker Sheldon Silver is reportedly pitching a plan for an increased “millionaire’s tax” aimed at 75-85 thousand New Yorkers making $1 million or more a year.

    Political columnist Fred Dicker , who appeared on Wednesday’s Good Day New York, says Silver secretly proposed a $1 billion tax hike on the highest income earners to Gov. Paterson.

    The plan would jack up a current millionaires tax another 11-percent. The current “millionaire’s tax” actually starts affecting people who have incomes over $200,000. High income tax earners would pay more than 13-percent of their salary in local taxes.

    It’s like they are intent on forcing the wealthy out of the state.

  60. 2010 May 26 7:18 pm

    Poetic justice in a way, as many of these millionaire types are limo lefties anyway.Those that aren’t will vote with their feet.Whatever happened to ” equal protection of the law” ??

  61. 2010 May 26 7:56 pm
    retlaw permalink

    Yea!!! Poetry night is on the BJG horizon.

    Any day is good for me.
    Does not have to be Friday.

    Saturday or a day next week would work for me too, especially if IP could come out and play (serve up a dose of his poetic offerings) on any of those days.

  62. 2010 May 26 8:07 pm
    mulletover permalink

    A mid-week poetry night.


  63. 2010 May 26 8:39 pm
    JustMary permalink

    Saturday night it is then, works out better for me anyhow. Mullet, you need to copy paste your offering! It was great! I’ll even email Christie some of my faves as a token of my [don’t you ever ever screw this up because every other politician is a mega letdown, oh and please move to Alabama] love and appreciation. 😀

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