Wednesday, May 05, 2010

What is really going on?

While the Europeans are distracted by the threat of 'contagion', some interesting details are emerging from across the pond. And it doesn't look good.

The official narrative remains unchanged: Europe is a dangerous place to keep your money. The economy in the U.S. is in recovery while the European economy is struggling (oh really?), the USD is safe and strong and the U.S. Treasury market is never likely to be hit by 'contagion'. Indeed, according to the official narrative, the U.S. can deal with its huge fiscal deficit and its external deficit just by printing money. The fact that the Weimer Republic option is bandied about as a real policy option beggars belief. And yet, and yet.....

the plot thickens.

U.S. bond markets have continued to rally, supposedly helped by a flight to safety, only that safety is starting to look more than a little dubious. How long? No idea. Not long.

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