Off the Cuff: Contagion Within Europe

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

• Desperate Measures
  • The math behind the latest 'rescue' attempts is so broken it falls apart at first glance
• How Much Time Do We Have Left?
  • The day of reckoning is approaching, but Europe is showing us we still have time left to act
• Where to Park Capital
  • The options worth considering grow fewer in number, though Europeans should take action soon

Europe continues to figure prominently in Chris and Mish's minds at the moment. The action there is what's driving the world agenda right now, and the decisions taken to address the European crisis will have tremendous impact on the financial markets around the globe. Much is happening right now — but for longtime 'Off the Cuff' listeners, it's important to keep in perspective that little has actually changed. Europe's problem is a mathematical one. Too many bad loans were made. In practically every country. Steep losses will need to be taken. Taking those losses will place painful deflationary pressure on asset prices. The key question is: how much new money will central banks print to service and retire those debts?

Desperate Measures

Europe's leaders are now resorting to shoddy number tricks that a fourth-grader can quickly refute.

The latest proposal for bailing out Spain's banks (which until recently Spain insisted it would never need), among other head scratchers, includes commitments from Italy to loan to Spain at a 3% interest rate. What's the problem