"The most concerning news of the week was when the IMF reported that everything was A-OK and the world would grow by over 4% this year. When the IMF says that, it's time to run for the hills. Having ruined many developing nations with their loans, the IMF now has its fingers in the Greek pie as well."

On cue, all hell broke loose in Europe. Markets fell, bonds plummeted, and the cost of insuring debt went through the roof. Dan looked into it all on target="_blank">38% (p.a.).

But the Daily Reckoning has been telling you about all this for a while now. It shouldn't be a surprise.

That's not to say there weren't plenty of surprises anyway.

Amid the

More on this below.

Other ridiculous revelations include the fact that Ireland and Portugal, among other cash strapped, deficit posting nations, will be contributing to the hypothetical Greek bailout. Yes, despite the fact that their bonds are right in the middle of the turmoil, they have decided to

The European Central Bank's Jean-Claude Trichet had been reassuring everyone that there is no reason to fear contagion on sovereign debt problems. Like he makes that decision! And what on earth is his definition of contagion?

is obviously different. Let alone the OECD head Angel Gurria, who used a clever simile and said that the crisis was like the Ebola virus.

Angel's target the thorn in the Greek bailout's side, refusing to do its bit without a credible target Fox News:

"This is a suicide mission. And I'm glad that my fellow Erskine Bowles and I are jumping without a parachute."

Talk about inspiring confidence! The poor anchor tried to steer the conversation back on track:

"Do you worry, as you go after the deficits, about possibly pushing this fragile economy back into a recession?"

"Well, I don't worry about anything."

But that doesn't mean the Deficit Commission Co-Chairmen haven't been busy:

"I'm a stalking horse for my grandchildren."

And they have big plans for the future of the Debt Commission too:

"This is a situation where I hope in my naive green pea way that we can get all 18 of these fine people to say, this is where we are. This is - this is where we are."

As for where they're going, they haven't got a clue either:

"Somebody said, well, is the new health care bill off the table? I said, nothing is off the table, absolutely nothing."

But seriously, if we created a fictional scenario where a Debt Commission was formed to tackle government debt, and we came up with the above interview, you would all just scoff at it. And yet, here it is on

"But I know one thing. If we can get the figures before the American people, then we'll sit down and then all bleed and bitch from there."

"Yes, Erskine and I are involved in a project, screw the American people, fool them, fake them out."The font is too small.

Better still is the fact that this breaches the Occupational Health and Safety Act.

The $200 million over budget side of things doesn't breach anything though.

To keep up with the fun, the taxpayer funded Comcare decided an investigation into the new system was warranted. But what exactly did they investigate? A number of useful things of course, including several complaints made by those operating the system.

The investigation concluded that the complaints of excessive scrolling required to use the system were not valid, as "the ATO have effective reasonably practicable control measures in place" to deal with this issue.

Scrolling as in scrolling down the page on your computer screen...

The next time you consider buying a government bond, consider that this is the sort of thing the money is spent on.

The Golden Boy

Bill Bonner stuck to his guns and stood up for the underdog again on

In other words, serving your customers and being prudent with your own cash is no longer a viable strategy. No wonder Goldman puts congresspersons on their payroll / donation lists.

What would a greedless, altruistic investment bank have done during the housing bubble?

In this case, doing the right thing was to tell your clients to bet against the US housing sector. But doing the "right thing" during a housing bubble just wouldn't sell so well. Bubbles are characterised by euphoric buyers, not wise contrarians.

Goldman couldn't control what its clients wanted. Besides, its job is to serve their wishes. Meanwhile, it has to make sure that its own investments are sound.

If people want to be unreasonable, then they shouldn't be the ones controlling capital flows, or the bubble would just get worse. Let that capital go to those with the brains to know where it will be used profitably. That is what profit and loss does.

But there ends Goldman's innocent streak. You see, betting on derivatives doesn't create wealth. Having liquid hedging markets is great, but Wall Street is well beyond that.

Then again, with a joke of an economy to invest in, one can't really blame Goldman for sticking to pessimistic derivatives.


Small Town USA

Back in target requesting for the National Guard to be deployed in their communities because the police can't handle the gun violence. Over in Pennsylvania, the state capital is

Having the rule of law become fuzzy and break down, as all of the above seem to indicate, isn't a good sign for a country's future. Is American dominance dead?


There is no better way to finish the week than with some wise words from Mogambo:

Well, you can't fault them for honesty, even in sarcasm...

But, bless Fox News, the anchor managed to get at least some sense into the interview:

"Over the course of the last two decades, there have been four separate commissions on some of these issues and none of their recommendations on tax reform, Medicare, Social Security, none of their recommendations have become law."

Talk about bursting their bubble...

Where Our Taxes Go ... Going ... Gone

According to a government investigator in the movie V For Vendetta, the most reliable government records are the tax records. If that is the case, the Australian government has a

"Well, in the middle of [my family's] rude hooting and making snide remarks about the adequacy of my mental processes and other of my various, although associated, personal faults and shortcomings, I heard, muffled yet distinct, the Federal Reserve Alarm (FRA) ringing in the Mogambo Big Beautiful Bunker (MBBB)! Something is up!

"Abruptly springing to my feet, I sprinted outside to the bunker door, hurriedly threw it open and ran to the FRA to see what was (pant, pant) happening. My breath coming in ragged gasps, I was horrified to see that they had increased Fed Credit by a staggering $20.5 billion last week! Yikes!

"And then, to add insult to injury, the Fed bought up $21.5 billion in US government securities last week, bailing out their slimy buddies, like banks and miscellaneous mortgage holders, and/or monetizing the insane increases in the national debt that Congress is running up, which, at last count, jumped by a hefty $42 billion last week, too!"

If the US feds can find $42 billion in a week, what's bothering those backward Europeans...?

Have a great weekend.