Is There Any Good News

Rich Galen

5/14/2012 12:26:00 PM - Rich Galen

Let's start with Europe and work our way back.

The Greeks held elections last week and they have not been able to form a government since.

The leader of the "Leftist" party (read, Communist), Alexis Tsipras, has told the rest of the European Union that he believes Greece should ignore the promises it made to be bailed out and, in essence, go off on its own.

According to the New York Times,

"European leaders have warned that if Greece does not keep its promises, Europe will stop financing it, which would quickly lead to Greece defaulting on its debts and leaving the euro zone, as the countries who share the common euro currency are known."

I'm not exactly sure what the Greek version of "nanny-nanny-boo-boo" is, but Tsipras appears to be chanting it. If a coalition government cannot be formed, new elections will be called and polls indicate the anti-bailout candidates will gain strength.

As of last night, it was being reported that Tsipras had pulled out of any further talks, so there you are.

Meanwhile up in Germany, Angela Merkel's Christian Democratic party has suffered its second major electoral defeat in as many weeks. In a regional vote the rival Social Democrats have gained control of Germany's largest state. Sort of like Democrats winning control of Texas.

According to the BBC

"Analysts say many voters rejected Mrs. Merkel's tough line on fiscal discipline as a cure for state debt. Voters in Greece, France and Italy also recently rejected austerity policies."

Compare and contrast to the issues in California discussed below.

Skipping over the Atlantic Ocean, Obama's America is not doing very well, either.

On the corporate front, the CEO of Yahoo, Scott Thompson resigned over the weekend after, according to CNNMoney.com "after it was found he padded his resume with an embellished college degree."

According to the LA Times

"Recent Yahoo filings with the Securities and Exchange Commission stated that Thompson had degrees in accounting and computer science from Stonehill College in Massachusetts."

But the college didn't begin offering a degree in computer science until four years after Thompson had graduated.

The reason that, as Yahoo called it, these "inadvertent errors" on resumes have such a huge impact is because your resume is absolutely and completely under your control. You know what jobs you've held, what degrees you've earned, what organizations you've joined.

You can't blame a phony resume on someone else.

But that bit of major corporate skullduggery paled next to the $2 billion - TWO BILLION DOLLAR - loss suffered by a unit of mega bank JPMorgan based in London.

JP Morgan, according to a piece in the Wall Street Journal, quoted CEO James Dimon, as saying, "if you did adjust current analyst estimates for the loss, we still earned approximately $4 billion after-tax this quarter give or take."

A billion here, a billion there and …

The thing about this $2 billion loss is it makes people like me, generally an opponent of more government regulations and generally in favor letting corporations take risks, stop and reconsider.

I can't help but think that somewhere in the JP Morgan corporate DNA is the thinking that if they really, REALLY screwed up, American taxpayers will bail them out.

Have to.

Too big to fail.

Moving west we learned late last week that the People's Republic of California was now running a deficit of $16 billion. SIXTEEN BILLION DOLLARS.

According to Bloomberg.com Governor Jerry Brown has submitted a ballot initiative which would:

"temporarily raise the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. The 10.3 percent levy on those making $1 million or more would rise to 13.3 percent, the most of any state."

The emphases are mine, not Bloomberg's, but I wanted to make the point that Gov. Brown's solution is to raise taxes which are already the highest in the nation, rather than cut spending.

The current unease among Americans is shown in the standard polling question: Do you think the nation is going in the right direction, or is off on the wrong track?"

According to the RealClearPolitics summary of national polls, that answer now stands at 33.8 thinking America is going in the right direction. But 58.8 percent think we're off on the wrong track - a spread of minus 25 percentage points.

For Barack Obama, that is one more bit of bad news.