The new baseline

I found Simon Johnson's recent comment fitting.  I increasingly feel like the world in general and our brave Obama in particular may be in denial.  The powers that be have managed to get the wheels back on the cart for the moment, but nobody seems to be willing to admit that the wheels fell off for a reason, and that the world needs to get together and restructure it's financial system or we will just face a repeat of the same pressures until the lid blows off again.

My takeaway: we are still not ready for hard economic conversations anywhere in the world.  Wishful thinking prevails, in Europe as much as in the United States.  No one wants to start the difficult and messy task of restructuring – i.e., reducing – debt payments.  Everyone feels entitled to a bailout.  And the banks get one.

Or put it to your elected representative like this – we're transferring Latvia's debts from European banks onto the IMF, which is underwritten by our future tax dollars; then there will be default and devaluation for which no one is prepared.

Brussels, you're doing a heck of a job.

To me, the debt restructuring is key.  We have proven that debt is a powerful but unstable way to tie together people and economies.  Unless we think about ways to mitigate that fundamental problem we are going to be in for a bumpy ride.