Tuesday, November 15, 2011


As I was postulating that Euro leaders saw no other way out of their debt problem than to speed up the fiscal reorganization and consolidation of power at a supra-national level, Kyle Bass was giving another wonderful interview with the BBC.  Since Kyle works in Dallas, he absolutely uses Texan slang and references even in the most stoic and formal settings.  In the interview he breaks down the challenges that the Eurozone faces and outlines a result that is 100% the opposite of what I described would happen.  He also logically lays out an argument as to why Germany would be stupid to continue bailing out the other Eurozone "partners".

While Kyle Bass is absolutely correct, I think he gives the leadership in Europe too much credit and assumes that they will be able to realize that they are throwing good money after bad and that it is just better to stop.  Funny, the Euro political class hasn't realized this yet and according to my post earlier today and the article by Clive Cook, they rationally won't either.

Please check out the EURO NATION which highlights just how disfunctional the thinking is at the ECB level and just why Kyle's logical conclusions may be totally wrong.  I think this is why it is so difficult to judge the outcomes of this situation, because these leaders are not managing the situation as a business owner would, they are driven by ideological motives that they feel are much greater than mere financial concerns.

The interview with Kyle is only a couple of minutes long and I highly recommend it. (Click the caption below the screenshot).

And just as I was publishing this, I noted this Tweet from none other than the Fed's mouthpiece Steve Liesman from CNBC.  This message contained within 140 characters summarizes everything wrong with central bankers, Euroleaders, and fiscal union supporters.

Steve basically says, "PRINT, PRINT, PRINT, cause if you don't the Eurozone is going to blow up, so might as well try to print anyway."  Thus, in a simple statement we see why Kyle Bass is so right, but will be wrong in predicting how Euro leaders will react to the situation.

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