Europe - Broke Again!

This was an amazing week! Besides the fact that we got to see some green on the board, the week was totally eclipsed by the latest off Broadway version of “The Mouse That Roared” as Slovakia took the world to the brink and for one bright shining moment held the fate of the world in its hands. On Thursday, October 13th somewhere in the second act, Slovakia approved Europe's enhanced bailout fund completing the ratification process across the 17 euro countries and all was right with the world. There is just one small little baby hic-cup. Europe is toast! The likelihood of Europe surviving grows slimmer every day. Let's get this straight right away. Europeans are not happy with the Euro and the common citizens feel the whole creation of the European Union was a big mess. The European politicians don't see this as a political problem but rather as a logistical one because they have to somehow sell the consolidating of the bonds to the public. If the European Union is going to survive it has to make the hard choice. It must consolidate all of the existing national debts into one “Eurobond.” The simple fact is that the failure to do this will cause the banks to fail and then we get to see the man behind the curtain. The truth about the accounting will rise to the surface. The lack of mark to market accounting that was installed as a quick fix following 2007 has only severed to make the bank's balance sheets even more obtuse. Remember Collateralized Debt obligations (CDO'S) and Credit Default Swaps (CDS) – that's the man behind the curtain. The outstanding derivatives would have wiped out much more if left mark to market. What was not told was that you can't pool mortgages. In order to foreclose on a property, you have to produce the mortgage to show you have the legal right to that property. When mortgages were made, they were typically resold and then they were pooled, sliced into tranches and no single investor held the mortgage anymore. Anyone who understands the law and the markets should have known this is why mortgages were never pooled previously. It's like trying to seize your neighbor's house claiming you were the rightful owner. In the real world the court would ask where is your proof of mortgage? This is how many people were able to stay in their house for 3 years or more without paying a penny in mortgage or tax payments. This is a small but accurate example of the mess that is going on in Europe. Politicians better start waking up. This is the entire financial system they are fooling around with. For far too long politicians have been masking reality to keep the game going hoping nobody notices the man behind the curtain. WE have to revise the world's monetary system before it wipes out everyone's future. This is not politics as usual.