08:50 – I just followed Barbara out to the body shop, where we dropped off her car. The guy told her yesterday when she stopped by for an estimate that it was a “pound-out” job, and that he wouldn’t need any replacement parts. We’ll pick up her car tomorrow afternoon or Thursday morning. Meanwhile, Barbara is driving my Trooper, which used to be her Trooper. The insurance company offered a rental car, but it’s not worth the hassle for a two-day repair.
Work continues on the biology book. I’m also ordering stuff to prototype the biology lab kit.
09:09 – I see that S&P has just been downgraded to junk-rater status, leaving Moody’s and Fitch as the only real ratings agencies. As the federal government pointed out at the time, S&P made a $2 trillion dollar calculation error, without which the US rating would have remained AAA even under S&P’s modified rules. I think Warren Buffett spoke for most knowledgeable people when he said that rather than reduce the US credit rating from AAA to AA+, S&P should have increased it to AAAA. The simple truth, as evidenced by bond yields and CDS prices, is that the market considers US debt to be by far the safest in the world, far better than that of other countries that are rated AAA. If Moody’s and Fitch have any sense, they’ll create a new AAAA or even AAAAA rating and award it to the US and only the US.
12:09 – The much-anticipated conference between Merkel and Sarkozy started a few minutes ago. I’ll predict that they’ll do nothing but talk. That’s understandable, because there is no action they could take that would save the Euro. They’re powerless, so they might as well have a nice chat. I very much doubt they’ll do anything other than agree to support the decisions made at the 21 July summit, which of course is and was a joke. Sarkozy will be pushing for boosting the ESFS, which Merkel and the Germans will refuse to pay for. Sarkozy will also be pushing for Eurobonds, which again Merkel and the Germans will refuse to pay for. Ultimately, the problem is that almost all of Europe is bankrupt, with huge debts that they have no hope of ever repaying and economies that are so unproductive that most of them aren’t even keeping up with population growth. What should happen is that Germany, Holland, Austria, and Finland abandon the Euro and let those profligate countries that remain on the Euro go bankrupt. I’d like to see that announced after the conference, but the chance of that happening is nearly zero.