China - New Lender of Last Resort?

The US is living on borrowed money (yes, thats the money we used to bail out the real estate deadbeats, finance easy money for new homeowners, car companies). Europe is living on borrowed money ("stimulus package" to do the same, but of course, since Europe has all kinds of restrictive laws around firing people, their economy hasn't turned around as quickly, PLUS most recently, the recent retroactive payment on Greek democracy).

Who has money to deal with further crises?

Today we were reminded, China! China has been hoarding all our US cash while we've been borrowing to finance our fancy consumption standards.

If they have cash, why don't they step it up to bail out these Greek dudes?

It is an economic concept called "free riding". If the other developed countries pony up the cash to deal with this, why bother? China can just free ride off the other countries providing financing to float the global economy towards uninterrupted consumption of "stuff", which of course drives the Chinese economy.

Would China step it up if the global pockets are empty?

Trades on deck:

GS

Euro

Greece taking payment for democracy

Looks like this Greece thing is blowing up the financial systems. Not sure euro can handle it. Today's market activity is a little troublesome. Any time there's a precipitous drop like that it means that people are scrambling for the door, not running valuations. Reminds me of August 2007, when all of a sudden and without warning, the market just spontaneously dropped.

I guess we've had easy money for a while, so that's to be expected. Even though the market did bounce back up (perhaps from short covering), these types of drops are not momentary. They signal a fundamental weakness in the confidence of investors, and possibly foreshadow a lack of liquidity (everyone cashing out no matter what the price).

Would not be surprised if we head downhill for a while.

Scary stuff!