What, you mean the Bundesbank would like to "own the world"?

As Spanish banks scramble for collateral to use in the refinancing operations that are keeping them afloat, the Frankfurt-based ECB said it will cut the rating thresholds and amend eligibility requirements for some asset-backed securities. While the move will give stressed banks greater access to ECB liquidity, it may also increase the amount of risk on the central bank’s balance sheet.

“We’re critical of this,” Bundesbank spokesman Michael Best said yesterday. In terms of collateral, “we won’t accept what we don’t have to accept,” he said.

....

“It’s almost the usual game: the ECB has to do something to alleviate a liquidity crisis and the Bundesbank isn’t very happy about it,” Holger Schmieding, chief economist at Berenberg Bank in London, said in a telephone interview.

This is not, as often claimed, a "liquidity crisis." 

When you continually spend more than you take in the problem is not liquidity.  It is solvency -- specifically, your insolvency.

There has not yet been one government that has voluntarily decided to cut the crap and spend only what it takes in via taxes.  The reason is that doing so means not just prospectively re-aligning services and revenues, but doing so retroactively and admitting that the promises made to people over the years were active and intentional frauds.

That's difficult, of course.  It's especially difficult when telling the truth means that the electorate might skin you -- and maybe literally, not just at the ballot box.

Meanwhile the Germans (and everyone else) are trying to play the "growth will save us" card.

At a four-way summit meeting in Rome yesterday, Merkel, Italian Prime Minister Mario Monti, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy said they would lobby their European Union partners to accept a growth plan of as much as 130 billion euros ($163 billion), or about 1 percent of the euro-region’s economic output.

That won't work; you have to grow output faster than debt, which is clearly not happening!

Remember the basic function of exponents -- if one is larger than the other the two curves always run away from each other.  You can't make the laws of mathematics change by political decree -- your options are to either (1) deal with it or (2) have it blow up in your face.

And if you think it's not going to hit us here in the US, well.... read this:

Critics say the GASB changes don't go far enough, particularly in the way states will have to calculate pension liabilities that stretch over several decades.

To make that calculation, pension plans use a "discount rate"—an interest-rate assumption to determine how much future benefit payments are worth in today's dollars.

Public pension plans use the rate of return they expect on their investments, typically around 8%.

The lower the discount rate, the higher the obligations' current value—and higher obligations mean a bigger funding gap.

Yeah, those pension funds...... oh, you think they're safe eh?  I've been pounding the table on this since 2007, but that the bomb hasn't gone off yet makes everyone chortle with glee that all is fine.  Or how about things like Medicare and Medicaid (which have been 9.3% compound growth expense rates for the last 30 years), among other "tiny" little problems.....

The nature of exponents means that these sorts of problems have a habit of appearing to approach slowly over time.... and then all at once.  That's how it happened in Europe and it's how it will happen here, and it's simply a matter of mathematics.  That is, all exponential series behave this way, so nobody should be surprised when willful refusal to deal with the "small, in the distance" problem suddenly looms large and goes "boom."

I recommend that everyone take the weekend and enjoy nature, recognizing that the laws of mathematics in fact will always win out in the end, whether the bloviating politicians like it or not.