Fixed what?

I'll be lazy again today and just provide excerpts that summarize very well. The gist of it is that having bankrupt countries borrow money from other bankrupt countries to try to save other bankrupt countries is absurd. What the Euro shenanigans over the weekend actually did was to show that the Euro zone is just as pathetic and the US and UK, willing to just borrow and spend, borrow and spend like there's no tomorrow. Everyone knows there will be hell to pay, and soon. They do it anyway.

The Gold Report: Today we are talking with Casey Research Chief Economist Bud Conrad who recently presented a riveting talk during Casey Research's 2010 Crisis and Opportunity Summit. Here are four major points from his talk:

1. The world economy is in a calm between a credit crisis turning into a currency crisis as the collapse of the private debt bubble is replaced by a government debt bubble that will also collapse.

2. The world is at a point of no return for government debt as debt-to-GDP approaches 100%. When debt becomes too big, governments cannot control the interest rates and currency. The lead warning is Greece, much the same as Lehman Brothers was in the credit bubble crisis.

3. Peak oil. The wealth of humanity has been built on energy. Half the world's conventional oil supply is already used. That means that the quantity of oil produced each year will not increase much from the current level even as demand from developing countries like India and China increases. Wars over oil have already started. Energy prices will rise. We will see a substantial rise in the cost of food, as food production requires energy.

4. The U.S. can prosper and stay ahead of the rest of the world by developing and investing in three forms of technology—the Internet and cell phones, new medicines through biological breakthroughs and new sources of energy. All are good investment opportunities and are necessary for human expansion.

Excerpt from another article:

The Federal Reserve's involvement warrants a closer examination. The Fed has indicated that it would participate in dollar-swap agreements with the ECB, similar to one it undertook in 2008. Without an audit of the Fed, we can only speculate as to what exactly this swap entails. However, a reasonable guess is an exchange of freshly printed euros by the ECB for freshly printed US dollars by the Fed at the current exchange rates.

The Fed would then use the euros to either directly or indirectly purchase the debt of the eurozone nations. The ECB in turn would use the dollars to purchase US Treasury debt. Therefore, this is just a convoluted scheme to monetize government debt. It's a cinch that the funds necessary for this bailout would be created out of thin air rather than raised via taxes or issuing debt. Only in the world of central banking and thin-air money creation can one bankrupt entity bail out another.

And another excerpt from another:

A Play for Time

Impressive as it sounds, the trillion-dollar rescue package – which still has major logistical kinks to be worked out – essentially buys time and nothing more. The real problems of the eurozone are left woefully unaddressed.

If anything, in fact, those problems have been made worse by this desperate action. Consider the following:

Europe is effectively borrowing huge sums from itself.

Spain and Portugal now have far less incentive to "belt tighten" than before.

The issues of high unemployment (Spain +20%) and slow growth still loom.

Greece, aka "patient zero," is still at long-run risk of default.

The ECB's credibility has been torn to shreds.

Can we believe anything the European Central Bank has to say? Last week they said debt monetization (buying bonds) was not even under discussion. Then they did exactly that a few days later.

"If the rules of the euro can be rewritten on a Sunday night in Brussels once," Bloomberg columnist Matthew Lynn opines, "they can be rewritten next time there is a crisis. Investors will remember that. And they won't believe what they are told about how the euro operates from now on."