Saturday, December 3, 2011

Morning coffee on the West Side

I'm sitting here with G having morning coffee at a diner on the Upper West Side, looking out the window at a few cars passing by on Broadway. It is a bright, clear, cold December morning. We came here once about eleven years ago, and it is a nostalgia trip back. 

The markets rose steeply this week, on the back of a swap line agreement between the major central banks and a better-than-expected payrolls number yesterday. But things are still very fragile and volatile out in the world. 

The latest talk is for the ECB to lend several hundred billion - or even a trillion or two - to troubled eurozone sovereigns via the IMF. This would add some strict conditionality to the mix, and make it easier to argue it was not straight monetization of debt. That might help buy time. 

How far we have come since European officials considered any IMF involvement at all an offense to the strength and developed-country status of the eurozone, just two years ago.

G has spotted a nice dog out the window. "What a nice dog", she says, and tries to persuade me to have another slice of her french toast. 

But there is nothing which suggests the broader economic model is not broken. The supercommittee in the US Congress broke down, without making any progress towards resolving American fiscal problems. There is little or no progress in the western world towards a sensible resolution of entitlement programs.

Sometimes it's nice just to sip coffee and watch out for nice dogs. A beagle!


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