Politics
But most stuff is:
1. Private sector job growth is looking good. If the pattern holds, it will do more to aid Obama's reelection than the killing of Bin Laden.
2. It looks like it is only a matter of time before a series of sovereign defaults in Europe. I don't know what this means for the US banking system. If we have an international banking crisis prior to November 2012 it will be bad for the President but much worse for the rest of us.
All of this is out of the control of the Republicans. Nothing to do but work at the blocking and tackling of politics and nominate a candidate who can articulate the policy changes we need to the widest possible audience.
Per the Federal Reserve, commercial banks in the United States carry about 6% of their assets in the form of one of the following: municipal bonds, asset backed securities (e.g. securitized credit card receivables), commercial and municipal paper, and foreign government bonds. I think about 12% of the Eurozone's central government debt is the issue of the four vulnerable countries. I would wager the exposure of North American banks to these bond issues is of scant consequence. If our banks have receivables due from toppled European banks, I suppose there could be some contagion....
The four countries in question have $1.2 tn in outstanding debt. In the United States, about 14% of the central governments' issues (U.S. Treasury, Ginnie Mae, Fannie Mae, Freddie Mac, &c) are in the hands of commercial banks. Savings banks and credit unions have an additional modest increment (2-3%). Another bloc would be in the portfolios of insurance companies (some fraction of the $6.2 tn in assets they hold) and another in those of defined-benefit pension funds (some portion of $2.4 tn). Posit for a moment that 40% of the PIGS issues are held by these sorts of institutions and that a restructuring cuts the face value of the debt by half. Making these problematic parties whole through purchases of preferred stock and indemnities could conceivably cost $240 bn. I would bet the healthy countries of the Eurozone could handle that. For some reason, they keep kicking the can six months down the road....
Oh, I'm sure the Republicans are going to be very good at the blocking and tackling. So, I offer a toast--"Gentlemen, when the barrage lifts."
Politics does not merely consist of progress.
Though it seems it can consist of a complete lack thereof.
AD, thanks. I'm reassured (I think.)