Thursday, November 17, 2011

Have you ever played Jenga?

You know when you take out that one piece that really destabilizes the whole tower?  Well, right now it feels like there are about 15 different pieces of the global economy that could be pulled out and destabilize us at any moment.

Ever since 2008, the best predictor of economic events has been the debt markets and their related instruments (CDS, etc).  Thus, when Italian debt suddenly shot over 7% last week it was clear that change was coming.  Well, today's French and Spanish bond auctions seem to signal things could be dicey in Europe again.  As a reminder, we're talking about FRANCE AND SPAIN.  These are major components of the EU economy and if things start to unwind in Spain the EU's life span could be shortened considerably.

Also, consider these headlines from the two countries that were "fixed" in the past 2 weeks -

* Greek police fired tear gas at black-clad youths on Thursday as thousands marched through Athens chanting "EU, IMF out" in the first public test for a new national unity government charged with imposing painful tax rises and spending cuts to avert bankruptcy.

* Italian students also threw eggs and fake dollar banknotes at the building of the Italian banking association. "We don't want the banks to rule" and "Monti's government is not the solution," the students chanted."

But, just in case you thought it was just an "over there" issue, remember Detroit?

"Mayor Bing is expected to discuss a confidential Ernst & Young report obtained by the Detroit Free Press that suggests Detroit could run out of cash by April without steep cuts to staff and public services.

That's a grim prognosis, but according to Brown, the city actually could be unable to make payroll "as early as December."

"I know the report says April, but there are certain risk assumptions that when you take those into consideration, worst case scenario you could run out (of cash) in December," Brown said this morning on WJR-AM 760."

But, but I thought all of those funky Chrysler ads said that Detroit was back?

Fact of the day:  1 out of every 5 Americans is taking a prescription for a mental disorder!

The spread among the sexes is pretty eye popping as well. 

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