The Spanish rescue.

OK, so the Spanish banks have been rescued by injecting $125B into the banks. Where is the money coming from? It is a bit shadowy at this point - from Spain's neighbors, we are told. Surely not? Spain's neighbors are running deficits themselves! So, who pays? I suppose we will learn at some future date.

While, this will reduce interest rates on bonds, it does not solve the crisis that is gripping Europe. The EU does not produce enough economically to run all the govt programs. They can not raise taxes (already too high) and they can not pare govt benefits (people will riot). Implicit in all the economic models is the concept that European debts will never be repaid, they will just borrow more to pay bondholders an interest and keep enlarging their national debts.

Ever since the election of an admitted Socialist as France's President, the French look on economics upside down. The French had reduced retirement age to 60. Now, how does that increase productivity? It does not. In fact, French deficits will grow.

How about the United States? We are following the same path, but faster. The US is running a deficit of 40% of govt spending and there is no prospect of the current regime reducing the deficit, let alone balance the budget. In fact, THERE IS NO BUDGET. The Budget proposed by Pres O'Bungle has received ZERO votes in the Senate and the Budget passed by the House has been voted down by Senate Democrats. The reason the Country stays afloat is that the Dollar is used as an international currency, so the FED can print it and buy Treasury Notes to finance the Deficit. Everybody knows that this can not continue forever. When we reach the end it will come swiftly.