It's Official-Greece May Default (Just a Tiny Bit), More Corruption from the Fed, and Why the Gang of Six Budget Proposal is a Trap

Today's emergency (note: they are always emergencies) meeting of Euro leaders seemed to show a slight acknowledgement of the obvious: Greece needs to default:

BRUSSELS (AP) -- Eurozone leaders on Thursday agreed to a sweeping deal that will grant Greece a massive new bailout -- but likely make it the first euro country to default -- and radically reshape the currency union's rescue fund, allowing it to act pre-emptively when crises build up.
The deal resolves a political deadlock between Europe's top economic authorities over how to save Greece that had investors worried the debt crisis would spin out of control. Faced with the danger of big economies like Italy becoming unstable, the officials sought to outdo expectations at an emergency meeting in Brussels.
The eurozone countries and the International Monetary Fund will give Greece a second bailout worth euro109 billion ($155 billion), on top of the euro110 billion granted a year ago.

The deal on involving private creditors is widely expected to be considered a "selective default" by the ratings agencies, making Greece the first euro country to ever be in default -- if likely only for a short period of time.

It looks like the pissing in the wind has been reduced to a tinkle for now, but it won't last.  This bailout is just another kick down the road that is the fiscal insanity can of the Euro Zone.  Once Ireland and Portugal need a second bailout, or Italy and Spain need their first, the fireworks will really begin.  There is already speculation that the European Central Bank will start holding defaulted bonds; Central Bank manipulation at its finest.

Simon Black calls it "Print. Lie. Borrow. Deceive. Deny."

Sen. Bernie Sanders ironically calls it socialism:

The Federal Reserve had more than $1 trillion in loans out to a wide range of financial institutions during the financial crisis, according to a new audit of the central bank.

The Government Accountability Office (GAO) released its top-to-bottom audit of the Fed Thursday, opening the central bank to fresh criticism from the lawmaker that had pushed for the audit in the first place.

The GAO was directed to conduct the audit by a provision in the Dodd-Frank financial reform law pushed by liberal Sen. Bernie Sanders (I-Vt.).
He was quick to blast the Fed for its far-reaching activity during the peak of the financial crisis.
"As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," he said. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

The GAO found that the Fed awarded $659.4 million of contracts to private parties during the crisis to help facilitate those emergency moves.

Sorry Sen. Sanders, the word isn't socialism, its fascism.  I thought you were a socialist anyway?
Sen. Sanders may be an avowed socialist, but he sure knows how to tear Fed officials and their bankster beneficiaries a new one:

The Federal Reserve Bank of New York’s William C. Dudley got a waiver in 2008 to keep personal financial holdings of American International Group Inc. (AIG) after the company received a Fed rescue, a U.S. senator said.
Dudley, who was the New York Fed’s markets-group chief at the time and is now the bank’s president, is the senior New York Fed official identified in a Government Accountability Office report today as receiving the waiver, Senator Bernard Sanders, a Vermont Independent, said today in a statement. Jack Gutt, a New York Fed spokesman, declined to comment.

Inflation benefits those who receive the newly printed "wealth" first and serves as an incentive to consumer over save and robs those on a fixed income.  These reasons alone should be enough to put a check or barrier on how much Central Banks can inflate.  Thanks to Chad D. of Of Two Minds, there is another reason to discredit inflationists:

I've never seen this topic covered (not to say that it hasn't) which is of great interest to me: the nexus of the criminal justice system and the financial system, specifically the inflationary nature of our system. The criminal law books have statutes (and their associated regulations) with provisions regarding the value of property and the relative level of crime with which a person would be charged, if one violated that law. In addition, these statutes spell out the amount of fines and penalties for convictions for those crimes. The trouble is that these statutes are not indexed for inflation, so what happens is people are charged with a higher level of crime than they otherwise would have in the past, for no other reason than inflation.

Wow, can't say I ever thought of that.  It's basically the criminal punishment equivalent of what Rothbard called "bracket creep" in which inflation drove people to higher tax brackets in order to raise revenue for the federal government.

I will end with mentioning this great Investor's Business Daily editorial pointing out the flaw in the stupidly called "Gang of Six's" plan to (not) tackle the long term budget:

The "plan" Obama was praising isn't a plan at all, but a few pages of bullet points with vague concepts, promises of future cuts, and confusing, and at times contradictory, numbers.
And what details it does contain show that the gang has employed some of the most egregious budget tricks available to make the spending cuts look bigger and tax hikes smaller than they actually are.
The best example of this is the plan's tax proposal, which alternately boasts that it cuts taxes by $1.5 trillion and raises them by $1 trillion, but which more likely will result in taxes going up by more than $3 trillion.
According to the outline, the $1.5 trillion in "tax relief" is how the Congressional Budget Office would score the plan.
But what the gang conveniently leaves out is that the CBO's forecast has $4.6 trillion in tax hikes already baked into it. That's because the CBO baseline assumes all the Bush tax cuts get repealed, that every other temporary tax cut is left to expire, and that the alternative minimum tax continues to entrap millions more middle-class families each year.

Once you take that into account, the $1.5 trillion in "tax relief" turns instead into a $3.1 trillion tax increase over the next decade. (It's anyone's guess where the gang got its $1 trillion tax hike figure.)

Whatever scheme gets adopted to reach a deal on the debt ceiling, it will have this type of effect.  Spending cuts won't come, but tax increases (revenue generators is what they will be called) will.  Michale Reagan tweeted the concept perfectly:

Don’t let the liberals fool you! My dad was promised $3 in spending cuts for every dollar of new taxes. He died waiting for the $3 in cuts!

Update- Check out this awesome pic I got on the rode today: