![\"\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2011\/07\/GoldRocketScience.jpg\" "\\"GoldRocketScience\\"")
<\/a><\/p>\nWeekend reading. Two quotes: + Earnings season is shaping up well. The 143 S&P 500 members reporting so far have beaten estimates by an average of 9%, triple the long-term average, according to Thomson Reuters. (Higher earnings may not be enough to stem the tide of dismal macro-economic events — like debt ceilings and debt problems.)<\/p>\n + This is the sixth time in 18 months European leaders have announced a definitive solution to the Euro crisis.<\/p>\n John Mauldin on hte mess in Europe: The Irish can’t afford to pay that debt. It should have never been taken on to begin with, and Irish voters threw the government that did it out of power. It cannot be lost on the leaders in Ireland that when the Greek prime minister called the EU’s bluff, the EU blinked. Trichet agreed to take on Greek debt after saying “non” for months, but with guarantees, kind of, sort of. Merkel caved. Ireland has to be paying attention.<\/p>\n Is Portugal any better off this week than last? Italy? Spain? Italy and Spain have barely any nominal growth in GDP, and the nominal growth of both these countries is below their debt-service growth. That is basically Ponzi-level finance. They have to issue new debt just to finance the old debt. And that is why interest rates are rising in both countries. Spanish banks have huge holes in their balance sheets from real estate loans that simply have not been written down. If Spain were forced to underwrite their banks, they would quickly be insolvent.<\/p>\n To get an idea of the relative size of the problem, Germany has a GDP of about $2.5 trillion. The Italians have issued DEBT of $1.9 trillion. Italy’s debt-to-GDP ratio is approaching 120% (if it’s not already there) and is the second highest in Europe, following Greece. There is not enough money in Europe to help Italy, should the markets start to really run up their interest rates, as they must roll over debt. And higher rates mean that the debt costs and interest payments will be even larger. Their latest budget deficit was 4.6% of GDP, which means they need to borrow rather large sums of money<\/p>\n Italy does have a few things going for it. Much of its debt is of longer duration, so they have some room to maneuver for a few years if interest rates can remain kind, but they must find a way to increase growth or they too will become a Eurozone problem. The latest budget and austerity measures may give them a surplus, which they can use to pay down debt; and that would placate the markets.<\/p>\n And don’t forget France. The French may talk a good game, but their budget is in a shambles and their entitlements are unsustainable. There is a French day of reckoning coming.<\/p>\n Who is Going to Buy that Debt?<\/p>\n I had a conversation with my good friend Lord Bridport, who runs a major bond trading house in Geneva, selling bonds to pension and insurance funds in Europe. The plan is for the Eurozone to issue eurobonds and sell them into the private market to back the various bailout schemes. I asked him whether he thought his clients would buy. He said very clearly he would recommend they do not buy<\/strong> until it is quite clear who and what will back them. Otherwise, buy German and other solvent-country bonds. This is going to be a tough sell in Europe, gentle reader, if Alex is saying “no”; and he is not alone.<\/p>\n You simply have to admire the commitment of European leaders to ignore common sense, simple arithmetic, and their voters in pursuit of the goal of a United Europe at all costs.<\/strong> It is really quite astounding.<\/p>\n I hope Europe pulls it off. I really do. They have done the US a huge favor by adopting this latest plan, as it keeps their banking system from imploding; because their banks are essentially insolvent with all the sovereign debt on their books. Such a banking crisis, which would be worse than 2008, in my opinion, would no doubt plunge a world already slowing down back into recession and pull our own slow-growth economy down into recession with them.<\/strong><\/p>\n How long can they kick the can down the road? My guess is that it will be longer than we suspect.<\/p>\n I continue to predict the euro is going to parity against the dollar if it survives with all the current members intact. Parity may be optimistic.<\/strong><\/p>\n Mauldin on the U.S.\u00a0 and its 9% eunemployment:<\/strong><\/span><\/p>\n We keep hearing about what the government should do to create jobs. And the reality is that it can do precious little. Private businesses create jobs, and nearly all net new jobs for the last two decades have come from start-up businesses. What government can do is create an environment that encourages new businesses, get rid of red tape (especially in biotech, where the FDA is mired in the 1980s!), stop creating even more rules that make it costly for new businesses to hire, and so on. I could go on, but the fact is, we are in for a rather long period of higher-than-comfortable unemployment. And that means lower tax revenues and a more difficult economy.<\/p>\n Useful iPhone apps:<\/strong><\/span><\/p>\n + Maps.\u00a0 Excellent GPS and directions. Comes with the phone.<\/p>\n + Viber is for free international calling.\u00a0 Best to be connected to WiFi.<\/p>\n + Pandora for streaming music.<\/p>\n + ThisAmLife — This American Life — over 400 programs of this popular NPR program.<\/p>\n + Dragon Dictation.\u00a0 Dictate your thoughts into text — e.g. while driving. Remarkable accuracy.<\/p>\n Fun iPhone apps for your next party:<\/strong><\/span><\/p>\n + <\/strong>FatBooth. <\/span>T<\/span>ake a picture and then improve it.<\/span> <\/strong><\/span><\/p>\n + AgingBooth. Show your friends what they’ll look like when they’re as old as I am. + Boob Job. Give your favorite friend large breasts. A bargain at 99 cents. + Mustache. Talk through your iPhone. <\/span> Good ideas:<\/strong><\/span><\/p>\n + Upgrade to Firefox 5. Click here.<\/strong><\/a><\/p>\n + Don’t use the iPad charger on all your other USB chargeable devices — like your cell phone or Veriszon broadband access card.\u00a0 Use a smaller, less powerful charger. I don’t know why.<\/p>\n Favorite latest New Yorker cartoons.<\/strong><\/span><\/p>\n
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