How to fix a debt crisis? Issue more debt of course!

This article comes a bit late, but I think this topic is important enough that it needs to be stated.  About a month ago, the European debt crisis which started in Greece started spreading to other countries in Europe, sparking a global sell-off in equities.  This is hardly surprising for anyone who understands economics, but what is unbelievable is what happened next.  A 1 Trillion dollar bailout package.  Wow.  Right when I thought government idiocy couldn't stoop any lower, they prove me wrong.  How do we solve the world's worst debt crisis in history?  Of course, issue more debt!  What's even more surprising is that many people are actually RELIEVED over this news, which shows absolutely NO understanding whatsoever about what caused this whole crisis in the first place.  "Kicking the can down the road" not only does not solve the problem, but it makes it worse. We have just entered the beginning stages of a worldwide sovereign debt crisis which will eventually spread to the United States, and it's going to get ugly. 


On Friday, we got a jobs report that was absolutely abysmal.  Although 430,000 jobs were created, almost all of those jobs were for the Census 2010 program!  In other words, the jobs are non-productive and they do not grow the economy like private sector jobs that produce goods and services that people actually want to consume.  This is just the latest indicator on how unhealthy this economy really is.  Many years of over-consumption for the US consumer is now going to be followed by another period of deflation, where consumers pull back and save money in the face of another down-turn in US housing prices which has just begun.


What all of this means for the stock market is a double-dip recession. The "recovery" that we experienced over the past year was not a real recovery, it was a result of stimulus programs, inflation, and relentless printing of money.  None of which actually improve the economy, but they do create the "appearance" of an improved economy.


The next 6-12 months will be ugly as the 2nd leg of the recession (depression) takes hold.  The fundamental problems that caused the recession in the first place (i.e. debt) have never been solved, and now it is time for it all to play out.  Cash is king, folks.  Prepare yourselves for some ugly times.