It is fitting that there is an announcement in the papers about an upcoming auction of Edvard Munch's painting "The Scream" because as one looks at the financial state of the world we all want to scream.
Greece has managed to force the Europeans to loan that country enough money to pay back what Greece owes to the Europeans. As the head of a reporting government dealer trading desk told me "It is a liquidity solution to a solvency problem". Greece is like your brother-in-law who always needs money. He keeps borrowing from everyone and promises to do something different but never does. All you hope for is that the latest loan will last a few months longer than the last one. One thing is certain, Greece and your brother-in-law will be back!
The governor of NJ Chris Christie has put forward his new budget. The Governor is predicting revenue growth of 7% to pay for increased spending. The latest six months of NJ state revenue has been $326 million below expectations. Also included is a predicted return on the state pension funds of 8.25% when the return for last year was 1.7%. This proposal is being used to justify an income tax cut. The George W. Bush administration showed us that if you cut taxes and increase spending the economy will respond in the short term, but you will be presented the bill later. We are still paying the bill presented in 2008 and most states including NJ have taken significant steps to improve their long term projects. Now is not the time to back slide into feel-good economics. Chris Christie has positioned himself as a tough guy. Now is the time to be a man and do what is right in the long run rather than what is politically expedient.
Another rating agency (Fitch) has sprung into action, they are concerned with the situation in Greece. They announce today a "default" was highly likely. Can't fool those guys. Since the current loan is predicated on a write down of holdings of Greek bonds of 50%+ I am pretty sure the investors in Greek bonds already knew that.