Who would have thought a year ago that Europe was the place to invest?

The market had hoped for a “Grand Bargain”. Instead, it got a small, ultimately insufficient fiscal deal. The best to be said of the agreement hammered out on New Year’s eve is that it beat the alternative. While investors still cheered, nobody should mistake this for an economic, fiscal, or financial positive. Ideally Washington would have crafted a deal coupling long-term tax and entitlement reform with short-term stimulus. Instead, we got the opposite. The US now faces significant fiscal drag on an already sluggish recovery.

The Financial Times, being based in London, obviously has an agenda here as it relates to investing in Europe. Yes, believe it or not, Americans are sitting on piles of cash and Europe, with its progressive stance is bleeding taxpayers to friendlier climes.

The FT goes on:

 … many smaller developed markets – Australia, Singapore, Hong Kong, Switzerland, Canada – came out of the financial crisis much better positioned than the larger, developed countries.

These are essentially socialist countries with the notable exception of Hong Kong which reverted back to Communist China. I submit the Europeans are looking at the pile of American cash with lust in one eye and the PIGS in the other. Portugal, Italy, Greece and Spain have all but collapsed, the EU and their currency not everyone wanted in the first place. The Germans must be running out of cash.

Washington has not offered investors an easy ride. Yet, investors still have better alternatives than a permanently high allocation to cash. Fundamentals are improving in much of the world, with even Europe looking somewhat less scary than a year ago.

It’s incredible. The Europeans are stating a case where they believe their markets are safer than ours. It’s unprecedented.

Mr. Obama has said he will use the Inaugural speech and the upcoming State of the Union address to push the debt ceiling higher. The push for a higher debt ceiling only makes this article more plausible, but he’s not going to be able to do that and grab guns at the same time.

Look for the gun-grabbers to fade away by Sunday now that the ranks of the NRA have swelled 250,000 in the last month. Executive Orders that violate the Constitution are of no effect, and Mr. Obama certainly doesn’t want the Supreme Court telling a Constitutional law lecturer so.