Some clarifications and more analysis about the EU debt “crisis”

Quick note because I hear people in the restaurant and see people on TradingWithCody.com’s chat explaining that Germany and the EU “have no other choice” but more bailouts and that such bailouts and ongoing rumors of new bailouts in Europe (and here too, by the way) will be bullish.

The option that the EU/Germany/US and everyone else has is to simply let the people/banks/investors who stupidly lent money to countries that can’t pay it back LOSE EVERYTHING and LET THOSE OF US WHO were smart/savvy buy their assets up at cents on the dollar thereby enabling that ol RULE OF LAW thing and thereby allowing prosperity and growth to return immediately. Those who think more bailouts are bullish are likely to be crushed in both the near- and long-terms, IMHO.  Conventional wisdom is 100% wrong about the impact of bailouts.

Second point regarding the EU/Euro and more bailouts is simply this — there’s not much can left to kick, not much road left to kick it down, and not many legs left to kick it with. Wasn’t like this three months ago. Things have changed and so have the likely outcomes from here.

Because there is not much road left to kick it down, and the likely outcomes have dwindled down, might that not be a good thing for the markets?

In the near-term, no, absolutely not!  Without artificial asset propping, the banks and their lenders/shareholders are totally insolvent and are getting more insolvent every day, so there’s likely a major sell off in the books if/when the latest EU bailout scams fail.

In the long-term, the ONLY WAY to bring prosperity and growth back is to bring back rule of law and simple contract enforcement. The only thing these governments are right about is that confidence needs to return before economic growth can resume. But we all know that the only way to bring confidence in the system back is to ENFORCE THE LAWS of the system.