Muzzle Awareness

Two articles online today seemed to me linked in an almost parable-like relationship. The first article reported that the head of the European Central Bank had told a contingent of African leaders that the world economy was at a dangerous point and was in danger of falling on the heads of all nations. The other story was about an unauthorized discharge of a rifle by a hunter that flew 1 ½ miles through the air and struck and killed an Amish girl when it hit her in the head.
“A link” you ask incredulously? Well, perhaps this might be a tortured metaphor, but hear me out. The hunter in the second story was cleaning his rifle, getting it back in pristine working condition, when he ignored some fundamental safety protocol and the bullet was sent out on its fatal trajectory……onto the head of an unsuspecting child. In the first story, the ECB is trying to clean out its’ system and is afraid that it may have, for far too long, ignored the fundamentals of an economy and now nervously awaits the fatal discharge that will come crashing down on all our heads.
The fact that 490 billion Euros in bonds were bought up by over 500 banks should not give you much hope in the situation resolving itself. As much as I know about economics, and granted it is not much, I have learned that money is (in the words of Niall Ferguson) portable power that only works effectively if its’ users have faith in its redeeming quality. Redemption used to be placed on the altar of the gold standard, but now it is linked to the “full faith and credit” of the United States………; a United States lacking both faith and credit, but having plenty of debt.
So, pouring more liquidity into a market hesitant over the faith of the United States and Europe to come to some sort of rational politico-economic solution combined with the increasing shoddy credit worthiness of the West, is like placing buckets of money in front of a degenerate gambler. Sure, it will keep him going for awhile, but what comes next?
Europe and the U.S. are quickly running out of parlor tricks to fool the masses into believing that the sky is not falling. Once in a while, we get glimmers of brutal honesty. Case in point was the ECB Chairwoman, Christine Lagarde’s comment about the global economy being at a crisis point. Think of this as the equivalent of someone noticing the bullet arching through the air, but unsure of where it will land.
Honesty, however, has a nasty habit of intruding upon political self-preservation. So, instead, we get the Chairman of our Fed, at FOMC meetings taking self-satisfied pride in announcing that interest rates will not rise and the economy has gone from “Holy shit, let’s get out of here!” to “That smell of smoke is not us, but Europe’s house. Don’t worry, they have everything under control.” So, when you look skyward to thank God for Ben’s deliverance, don’t be surprised if you see a 12 gauge slug coming at you.