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U.S. stocks crashed this afternoon, then bounced part of the way back. Pundits blame the Greek situation, although it is much more complicated than that. At one point, the Dow Jones Industrial Average was down almost 1,000 points. At just after noon, it is down around 400. To make a long story short, Greece is a microcosm of most of the world, including the U.S. Greece is living beyond its means. Just as the European Union is bailing out Greece, there is a feeling that the U.S. will have to bail out California, Illinois, New Jersey and other states. Another factor is that strong amendments to the financial reform legislation are gaining steam in Congress.

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Comments

patflannery May 6, 2010 @ 1:28 p.m.

We have been living in a giant expanding bubble of credit creation. I think that Wall Street is beginning to see the writing on the wall (pardon the terrible pun). The Harvard MBAs finally see that even if Europe bails out Greece, where is the next round of refinancing going to come from? Wall Street is now entering a “rollover crisis” and have only woke up to that fact. It is like a drug addict whose supplier just got shot (again pardon the terrible analogy). “The Street” is staggering from side to side of “The Street”. It is up and down like a yo-yo. Instability always comes before a crash.

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Anon92107 May 6, 2010 @ 1:38 p.m.

Thanks for the Great News Don: "U.S. will have to bail out California."

Or to put it another way, it means that corrupt and incompetent politicians in Washington, where they can print money, will now subsidize corrupt and incompetent politicians in California, and The Establishment in San Diego can continue destroying our public safety and health resources so they can maintain their standard of larceny.

This means that the Spirit of Duke Cunningham will continue to live on in San Diego via the likes of "Nero"/Typhoid Sanders and our "To Hell With the Rule of Law" judicial system.

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Don Bauder May 6, 2010 @ 2:58 p.m.

Response to post #1: Trenchant observations and good puns. For decades we have known that the welfare promises in both Europe and Japan were wholly unrealistic. Now the word is hitting home; the bond market is finally reflecting reality. Look at some numbers: Greece has a population of 11 million. It is getting $140 billion. That's a lot on a per capita basis. What happens when Portugal, Spain, Ireland, Italy have to be bailed out, too? Italy will break the bank -- shattering the euro zone if it puts its hand out. Finally, what about the U.S.? We have been living beyond our means, too. Several of our states our broke -- California in particular. Best, Don Bauder

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Don Bauder May 6, 2010 @ 3 p.m.

Response to post #2: Have you noticed how similar the words "larceny" and "lunacy" are? Best, Don Bauder

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Burwell May 6, 2010 @ 6:55 p.m.

What happens when Portugal, Spain, Ireland, Italy have to be bailed out, too? Italy will break the bank -- shattering the euro zone if it puts its hand out. Finally, what about the U.S.? We have been living beyond our means, too. Several of our states our broke -- California in particular. Best, Don Bauder

These countries, like the US, are victims of spreading economic cancer from Asia and will soon die from it unless trade relations with Asia are quickly severed. Loss of Western economic output to China, India, Korea, Brazil, Thailand, and Japan etc. is the root cause of the heavy governmental borrowing as US and European governments struggle to maintain living standards with massive increases in social welfare spending. The loss of manufacturing and white collar jobs is shrinking the government's tax base and causing deficits to swell.

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nan shartel May 6, 2010 @ 8:17 p.m.

will this all end when clean cut blue and white collar men between 30 and 40 start walking in front of (pick the appropriate buildings) with signs saying

"WILL WORK FOR FOOD FOR MY WIFE AND CHILDREN"

big business greed and outsourcing for higher profits has helped bring us to this

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Don Bauder May 6, 2010 @ 9:11 p.m.

Response to post to post #5: I agree that loss of the manufacturing base has eroded the tax base and exacerbated deficits, although there are a plethora of factors contributing to those problems. But I don't see how we can quickly sever trade relations with those countries. China, in particular, is keeping us afloat by holding our debt. Best, Don Bauder

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Don Bauder May 6, 2010 @ 9:12 p.m.

Response to post #6: You have the big picture in your sights: greed is the villain. Best, Don Bauder

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SurfPuppy619 May 6, 2010 @ 9:46 p.m.

Burwell is 100% correct-we have let China eat our lunch, allowing them to completely wipe out our manufacturing base.

We need to TAX everything coming in from China-will that set off a tit for tat trade war?? Yes, but so what, who cares, China will suffer far greater losses than the USA, they have far more to lose b/c they make everything we consume.

China is a predator (currency manipulation), but only b/c the USA allows it.

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Don Bauder May 7, 2010 @ 7:49 a.m.

Response to post #9: And why does the U.S. allow it? China is carrying our debt. I can remember the days when economists would argue that there was no problem with the U.S. becoming a debtor nation. Yes, that's what they said. Best, Don Bauder

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Don Bauder May 7, 2010 @ 7:11 p.m.

Response to post #11: No, just a doughnut with an extra large hole in it. Best, Don Bauder

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nan shartel May 8, 2010 @ 6:30 p.m.

loves dem smart donut holes..best to you Don Bauder

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nan shartel May 8, 2010 @ 6:32 p.m.

i can't believe what a prolific writer u r Don...how do u keep up with it and do it???

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Don Bauder May 8, 2010 @ 10:03 p.m.

Response to post #13: I'll be 74 this month. Those doughnut holes represent memory loss. Best, Don Bauder

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Don Bauder May 8, 2010 @ 10:06 p.m.

Response to post #14: My regimen is to take smart pills every morning. Except I often forget to take them, and also forget where I put them. You can tell on those days. Best, Don Bauder

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David Dodd May 9, 2010 @ 7:53 a.m.

Dang. Don gets the attention of all of the hot chicks ;)

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Don Bauder May 9, 2010 @ 10:41 a.m.

Response to post #17: ALL the hot chicks? I can think of only one, Nan, in the four or five years I have been doing this blog. I am scared to death of motorcycles. I don't have tattoos. I don't smoke or chew tobacco. I don't shoot pool. In short, the chicks consider me a sissy. Why would a hot chick be interested in such a dullard? Best, Don Bauder

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