Boom! Here comes the Boom! Ready or not, How you like me now?

The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
-- The Second Coming; Yeats

The next few days will be tough for the markets.  Investors have been circling the pundits and leaders, slowly widening the gyre, until the falconer is actually ignoring the falcon, as in Europe, or is yelling at it to go away, as in the United States. 

Der Spiegel has the latest on Germany's response to the Greeks ouzo sipping ways. Meanwhile, Bloomberg LP reports Italy is looking for a China bailout. This will initially give some relief and a bounce, but I remember learning that the last money in before an economic bust is often of foreign origin. Prince Walid

I wrote about Greece default, by choice or by riot, and the resulting threat to the Euro structure in June elsewhere (Real Time Economics and others were also early to the game). The spotlight is finally being shown on the situation, but the Europeans are delaying and refusing to deal with their mess. Euro-zone chiefs fiddle while countries burn

In the US, President Obama presented his jobs bill.  Whatever you made of his proposals, many analyses are available, the tax proposals suggested to pay/off-set the proposed spending are coming into full view. 

The bill will restrict some tax exemptions of interest from municipal bonds. The municipal bond market will get killed; "It would be dramatic for municipal bond demand,” said Matt Fabian
It makes no sense to funnel money to the States and local government, as part of the proposed job bill, and at the same time raise their borrowing costs.
Other proposals to offset spending that will discourage risk investment are being found.

Regulations and a yield curve that helicopter-Ben is helping destroy is reshaping the banking industry (BAC layoffs) and most likely moving the financial centers to Asia.

The devaluation of the dollar and essentially negative real returns offered to government debt investors and money market/cd participants is pick-pocketing Americans.  The intentions are well thought out, encourage riskier investments like stocks or real estate, but the reality is that the moral hazard created by the bailouts, the lack of transparency by financial companies, and the lack of certainty in fiscal, monetary, and regulatory policy have created a warning to the investment community; don't trust the guys and gals with the rose colored glasses.


Competitive devaluation further distorts markets and money flow. Lets all buy some Krone!

I think we are at a bifurcation point, hope and wants versus reality.
The reality is Europe's leaders don't want to confront its failed systems. The United States' leaders don't understand simple economics. The falcons, the investors and citizen stakeholders, are no longer willing to dance to their promises and calls.

Things fall apart; the centre cannot hold.

Be careful these next few days.