Disaster in slow mo.

Have you seen the video of the collapse of the stage at the Indiana State Fair? It was slow enough to actually observe it, but too slow for some of the victims to get away. That is what is happening to Europe. During Q2, Europe's exports fell by 4.9%, enough to knock Germany's growth to 0.1%. Europe actually did better at 0.2%. The last meeting of German and French heads of State resulted in the decision to NO INCREASE in the EFSF funds (an equivalent of our TARP bailout funds). So what? u might ax? What this means is that Italy and Spain will get no more bail outs and now that France is coming under scrutiny...well, Germany had it with the bailouts. And the European banks stand exposed to attacks on the interest rates they have to pay on their bonds.

Contagion is spreading to the US. Actually, US banks hold a lot of dollars doled out by the FED. They do not want to loan the money out, because the FED pays them interest. As soon as they start loaning that money out, inflation will accelerate even more than it is doing now. So, the FED has two alternatives: 1. do nothing and watch the economy deteriorate more or 2. do another QE and accelerate inflation. If inflation picks up, it will force up interest rates on Treasuries, which could add as much as $1T/yr to the deficit. The CHANGE is HOPE-less.

Meanwhile, Rush is ridiculing the Obama re-election theme (re-elect me for all the good I would have done if the Republicans did not stand in my way). O'Bungle had a Democrat Congress for two years! Every day, the reckoning draws nearer. Gold is on the march. Today it hit 1,822/oz.