The Kola Superdeep Borehole of Debt
A while back I wrote what kinds of things had to happen for a real bottom to form in a credible way. Number one was some kind of progress on Euro debt woes. Today may have been the paper over promise that markets want. Cullen Roche of Pragmatic Capitalism has a great summary and discussion:
MORE DETAILS ON EURO TARP
In sum, this looks like a start, but not a fix. Like the original EFSF, this plan will have teeth. But let’s not sugarcoat it. This is a kick of the can even if it’s a swift kick. The real resolution lies in measures not confronted by this plan. And until then, we can expect economic weakness and turmoil to ravage Europe as the inherent imbalance remains in place.
Not too exciting, but a break from the fears perhaps.
Readers know this kind of thing drive me nuts. Playing shell games using special vehicles to swap junk for cash does not fix anything, but it does allow everyone to go about their business.
So how much cash can be set aside to recapitalize banks and paper over bad debts across the world? I have no idea, but it just keeps coming. Where to stash all the bad debt? I maybe have a solution.
The Kola Superdeep Borehole
The project attempted to drill as deep as possible into the Earth's crust. Drilling began on 24 May 1970 using the Uralmash-4E, and later the Uralmash-15000 series drilling rig. A number of boreholes were drilled by branching from a central hole. The deepest, SG-3, reached 12,262 metres (40,230 ft) in 1989, and is the deepest hole ever drilled, and the deepest artificial point on earth.Would that do it?
The process is to continue to provide cash and call it a liquidity problem. It's a debt problem. In the borehole the debt stacks up, but happens if it's not turtles all the way down?
Have a good night.