"European government bonds are in trouble
because European governments are in trouble.
European governments are in trouble
because they spend too much money.
The Fed can’t change that, and hasn’t tried.
The ungenerous interpretation of the Fed’s action goes like this:
Everybody knows the jig is up,
but lo these many years after the 2008 crisis, trillions in bailouts later,
...we haven’t really reformed our financial rules,
[and] there’s insufficient transparency
to really know what kind of shape everybody is in...
...Europe has not solved its fiscal problems.
Europe shows no sign
of being on the verge of solving its fiscal problems.
Europe shows no sign
that it wants to solve its fiscal problems.
...We do not have the resources to bail out Europe,
and nobody has the resources to bail out the United States.
...One of the big problems
...was off-balance-sheet accounting,
using various bookkeeping shenanigans
to hide the fact that liabilities were dwarfing assets.
The United States government does that both in the obvious sense
— pretending that future entitlement liabilities don’t really exist
...Government spending in the United States
(at the federal, state, and local level) is about 40 percent of GDP,
and we’re borrowing 40 cents of every dollar we spend.
We’re spending the money now,
with promises of future benefits that amount to (literally)
more than all the money in the world,
and promising to pay off today’s spending out of future taxes,
as though the future is not going to want to spend the money on itself.
That is not a program for stability.
Not in Europe.
Not here."
Kevin D. Williamson
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