With Greece disintegrating before our very eyes, here are some recent blasts from the recent and not so recent past, showing just how clueless some of the most and least respected, strategists, bureucrats, drama majors, and former Goldman employees have been when it comes to Greece.
The only answer to the War on Drugs is the same as that to the equally stupid and destructive War on Demon Rum fought during the ’20s - a repeal of prohibition. The question is really whether you have a right to control your own body and what you ingest. There’s little question that caffeine, cocaine, nicotine, heroin, alcohol, marijuana, sugar, and a thousand other things aren’t good for you, at least not in quantity. But we can’t see how that’s anybody’s business but your own. Once it becomes a matter of state concern, then everything becomes an equally legitimate subject of state attention. Which is pretty much where we are today - well on the way to a police state.
Ideas Have Consequences... In Nazi Germany and Fascist Italy, in Great Britain, in Japan, and in the United States, there was a shift of opinion away from the free market in favor of government economic planning. The supreme mark of this transformation was the acceptance of John Maynard Keynes' unreadable book, The General Theory of Employment, Interest, and Money, which was published in 1936. A new generation of younger economists adopted this book and its outlook, which prevails today. The fascist economic idea of an alliance between government and business became almost universally accepted.
"As pension funds move into riskier investments in search of higher returns to fulfil their pension promises, they may be seriously compromising their solvency situation in the event of a negative shock."
"Sometimes, when the government tells you to do something, it’s best to do the opposite." When do you need a stash of cash? When the feds try to outlaw it. Hold some dollars. And some gold. But,what good will cash be after it is declared illegal, we hear you ask? We’re not sure. Maybe we’ve spent too much time in Argentina, where people have more supple and more subtle attitudes to monetary regulations. Trading pesos for dollars, on the black market, is illegal. Do it and they take you for a scofflaw. Don’t do it and they take you for a fool.
"The positive wealth effect of the equity market on consumption or aggregate demand is limited in China, but an equity market collapse would hurt millions of mid-class households and pose great danger to the economy and social stability."
Buy-The-Dipping, "Greece doesn't matter", Escape-velocity-forecasting, QE-front-running, Central-Bank-believing asset gatherers everywhere must be salivating at this 'healthy correction' opportunity...
With intra-Europe relations hitting a new all-time low; and, having already been busted spying on Merkel, Obama got caught with his hand in Hollande's cookie jar this week, the following exultation from one of Germany's top politicians will hardly help Washington-Brussells relations. As Russia Insider notes, Oskar Lafontaine is a major force in German politics so it caught people’s attention when he excoriated Ash Carter and Victoria Nuland on his Facebook page yesterday... "Nuland says 'F*ck the EU'. We need need an EU foreign policy that stops warmongering US imperialism... F*ck US imperialism!" When he comes out swinging this way, you know something is changing.
As we previously noted, liquidity is there when you don't need it, and it promptly disappears once it is in demand. Consider it "cocktease capitalism." If liquidity lasts longer than 4 hours, call the CFTC because you may be experiencing a spoof. Right now, the ultimate spoof is setting up as the credit default swap market collapses, and a global bond market margin call is just around the corner.
Reasoned market analysis will have to allow for stop losses getting off-side -- or panic-struck or trying to be prudent -- traders back to neutral, the potential consequences of the markets desks of every major central bank being on high alert and prepared to act (“plunge protection teams,” to use the vernacular of the financial crisis), as well as the frustrating reality of it being Sunday evening, which means markets will open ad seriatim and only slowly.
"More cynically, if a default of bank liabilities is inevitable, it may deem it better to ensure that domestic claimants on Greek banks switch into hard 'convertible' Euro banknotes (or offshore accounts), leaving the residual claimants (the ECB which has provided ELA funding) to take the loss."
Over the last few months the financial media has not only turned deaf ears to the drama, (out of boredom) they have also blindly discounted any contagion effects as “isolated” at best – relative periphery contagion at worst. In other words: Any and all problems can be contained, mitigated, or solved by none other than your friendly neighborhood Central Bank. After all, if you listen to the so-called “smart crowd” these bankers have powers even Zeus would envy. So why worry about a little turmoil at the foot of Olympus? In any hero-worship endeavor one thing must remain constant or it all falls apart. Those that worship can never witness any event regardless of how minor: that the gods are not all that they portend to be. In other words: Allow just one moment of truth to be witnessed showing frailty instead of omnipotence – and the whole ruse falls regardless of the size and strength of the monuments and temples built to honor. For they will be abandoned: sometimes slowly, at others - all at once.
With the ATMs running on empty and the banks set to be closed for a week, the German foreign office has some advice for anyone traveling to Greece...
As that €126 billion or so of total ECB/Eurosystem claims on Greek banks were "charged off" in case of a terminal Greek "event" then the entire ECB capital buffer would also be wiped out, leaving the ECB with negative equity. Translated: dear Eurosystem members: we need more cash.