The Greek Parliament narrowly passed the last austerity package, but not without Molotov cocktails and water cannon in the plaza outside, and several legislators being kicked out of their parties for refusing to vote for the measure. Now all of Europe waits for the other shoe to drop – the vote on the budget this Sunday. If the budget passes, the ECB is willing to cut the Greek government a little slack, as well as unlocking € 13.5 billion in loans.
Spain is trying to not dig itself the same hole, but as their economy contracts it is putting further drag on the collective European economies. Germany seems unable to carry the entire Eurozone on its back, and is seeing a slowdown domestically as well.
Back home, politicians in Washington seem to be getting the message from Wall St. that they had better stop the grandstanding and make meaningful spending cuts and increase revenue before the Fiscal Cliff hits on December 31. Moodys and Standard & Poors are both threatening to cut America’s credit rating if a deal isn’t made, which will increase the cost of the nation’s debt. All the while, Bernanke keeps the printing presses rolling – but what else can he do at this point? The die has been cast. Only with real fiscal responsibility from Congress (which means spending cuts AND more taxes) can we set the stage for winding down the smoke and mirrors of “QE to infinity.”
This morning, New York gold spot prices are trying to climb back to the $1,720 mark after the usual early morning drop at the COMEX opening. Silver is pretty much following suit, with similar fluctuations above and below the $32 mark.