The Cost of Obama Just Went Up

Just looking at the flashing red news item on my Bloomberg terminal...Greece's sovereign debt has been cut to junk. Just now I realize what Angie Merkel's game has been. I accused her of caving, but it appears now she has taken the Greeks a few extra rounds, as the boxing expression goes. If a bailout does come, it'll have come with Greece absolutely peering down into the abyss and Greek politicians experiencing a few extra weeks of excruciating political heat and discomfort than if the bailout had come easily in March. And it is still not over, the sweating that the Greeks must endure will go on slightly longer. This may be just as good as letting Greece fail and may in fact be nothing short of brilliant - the Euro gets saved but not before all the bad fiscal actors get the pants scared off them. Are you watching Spain, Portugal, and Italy!?!?

It has been argued that California, and the US federal government, is really no better off than Greece. I doubt that on qualitative grounds, but quantitatively it's not an outlandish charge. So, ironically, the further Greece spirals down the better for us all. The market will relearn what it has forgotten over the decades, that governments default, and not just two-bit punk South American hives of socialism. Putatively normal governments, like Greece, can default. Thus the price of credit is going up for governments worldwide and therefore the price of deficits. The entire worldview of Obama and the Democrats (and the traditionally bozo-infested confines of the mainstream Republican party) exists on deficits. So the price of Obama just went up. Maybe we'll get less of him. Supply and demand baby.