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The Kübler-Ross Model Of Terminal Keynesian Unwind, Or The Five Stages Of An Insolvent Greece

Tyler Durden's picture




 

In a piece oddly reminiscent to what our friends at Minyanville put up over a year ago, JP Morgan has just released a short report looking at the "Five Stages of Greece", a reference to to Kübler-Ross model of Denial, Anger, Bargaining, Depression and Acceptance. Unfortunately Minyanville's piece didn't get enough billing because despite being spot on, and absolutely correct in every aspect, the world was literally a year behind the curve to appreciate it. The full article can be found here. In the meantime, here is JPM's summary of where Greece was and where it is heading, based on inferences from clinical psychology when dealing with terminal diseases.

JPM contends that all the recent bailout #2 has done, is to wind the clock back by three steps:

The latest deal for Greece, based on a French proposal, is another chapter in the “Bargaining” stage: it maintains the fiction that Greece’s debts will be repaid at Par, and does little to address the crumbling economic and social situation in Greece, rising deposit outflows out of Greek banks and the possible exhaustion of their eligible collateral to post at the ECB, and collapsing Greek imports and exports. The plan is mostly designed to continue transfers from the EU taxpayers and the IMF to French and German banks, and buy some time (perhaps a year or so).

As for what happens next, JPM's Michael Cembalest has one word: Mexico.

Here’s another timeline of where I think we are in Greece: at the latter stages of the “let’s keep lending more money and
rolling existing exposures and hope it gets better” phase of the Mexican sovereign debt crisis in the 1980’s. I expect the
latest deal to be the last one before the eventual (and inevitable) restructuring of Greek debt.

It is oddly comforting that an individual's steps in dealing with terminal illness and the world's approach in dealing with sovereign insolvency are identical. Alas, everyone knows how both finish in the end.

 

 

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Fri, 07/01/2011 - 09:50 | 1418548 mayhem_korner
mayhem_korner's picture

Can we proform the chart for the U.S.?  I'd like to get some tee-shirts printed...

Fri, 07/01/2011 - 09:58 | 1418567 doomandbloom
doomandbloom's picture

 i'll take some " Greece is not Mexico " tshirts :-)

Fri, 07/01/2011 - 10:10 | 1418636 Arius
Arius's picture

Or ... "US is not Greece" tshirts.  profits to pay down the debt.  :-)

Fri, 07/01/2011 - 10:30 | 1418758 66Sexy
66Sexy's picture

Am I the only one starting to suspect that as long as the underlying sentiment on ZH remains bearish, we won't see the major crash we are all expecting?

Fri, 07/01/2011 - 10:42 | 1418812 Bohemian Clubber
Bohemian Clubber's picture

well I'll take a "Greece is not the US" T-shirt...

Fri, 07/01/2011 - 10:55 | 1418850 Peter K
Peter K's picture

And I will take the "Socialism es Muerte" t-shirt. Make that two ;)

Fri, 07/01/2011 - 11:17 | 1418918 Djirk
Djirk's picture

My shirt is going to say...At some point you have to cut your losses and re start the system   Axel

Fri, 07/01/2011 - 11:22 | 1418951 66Sexy
66Sexy's picture

Methinks its 'BTFDYFI" time again.

Fri, 07/01/2011 - 09:58 | 1418571 Jack Mehoff
Jack Mehoff's picture

Don't think the US even realizes it has cancer. 

Fri, 07/01/2011 - 10:33 | 1418761 Silver Shield
Fri, 07/01/2011 - 09:58 | 1418566 shushup
shushup's picture

Maybe Greece should buy US stocks with their bailout money - They can't lose!

Fri, 07/01/2011 - 10:00 | 1418582 dexter_morgan
dexter_morgan's picture

So wtf is going on with silver today?

Fri, 07/01/2011 - 10:04 | 1418618 lieutenantjohnchard
lieutenantjohnchard's picture

07/01/10: usual holiday raid: slv high open $18.06 high $18.07 low $17.36 close $17.44

range down:3.79%

same as it ever was

Fri, 07/01/2011 - 10:28 | 1418755 chartcruzer
chartcruzer's picture

it's just the usual summer softness in PM.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s162812743]&disp=P

However, check out the performance of silver to other investment classes over the long term.  

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s238253528]&disp=P

portfolio allocation is so easy while the debt bubble matures....

 

Fri, 07/01/2011 - 10:01 | 1418584 RobotTrader
RobotTrader's picture

How many stores does Starbucks have in Greece?

That country must be full of slackers drinking java all day.

$24 to $40 in 10 months, wow......

Fri, 07/01/2011 - 10:42 | 1418800 chumbawamba
chumbawamba's picture

As least they're not in an alley sucking cock all day, Mr. Trader.

I am Chumbawamba.

Fri, 07/01/2011 - 11:16 | 1418930 Djirk
Djirk's picture

you are cumbagblahblahblah  dont you have something intelligent or controversial to say

Fri, 07/01/2011 - 11:49 | 1419069 Girl Trader
Girl Trader's picture

You haven't been around long enough to know Chumba, obviously!

Fri, 07/01/2011 - 10:02 | 1418589 Caviar Emptor
Caviar Emptor's picture

Way, way too rational.

The Greek situtation isn't about Greece at all: It's about the TBTF banks on both sides of the Atlantic (and their Asian buddies too). Who benefitted from the Greek bailout: the banks directly. Greece itself actually suffered

Fri, 07/01/2011 - 10:06 | 1418611 The Profit Prophet
The Profit Prophet's picture

We're all Greeks now. Somebody wake me when it's time to pay Goldman a head tax.

T.E.I.N. everyone!

 

Fri, 07/01/2011 - 11:20 | 1418967 ceilidh_trail
ceilidh_trail's picture

T.E.I.N.?

Fri, 07/01/2011 - 13:30 | 1419480 Killer the Buzzard
Killer the Buzzard's picture

The End Is Near

Fri, 07/01/2011 - 10:04 | 1418606 Greeny
Greeny's picture

There ya go, Silver down, Market up. Last zone of support

33.40 and then straight down to 32.

Fri, 07/01/2011 - 10:07 | 1418646 trav7777
trav7777's picture

mosely-claven and all his bagholders losing the rest of their life's savings rotfl

Fri, 07/01/2011 - 10:16 | 1418678 lieutenantjohnchard
lieutenantjohnchard's picture

seasonal factors for silver. moved sideways in 2010 from 07/01/10 to 08/25/10 in a $1 range $17 to $18. broke out 08/25/10. never looked back until $50. hefty pullback. blew out the weak hands. folks such as me will be significant buyers if drops to $26 to $30 range.

Fri, 07/01/2011 - 10:54 | 1418859 Boston
Boston's picture

Yup, I have standing orders at $30 and $25 (for double the amount at $30) for physical.

Fri, 07/01/2011 - 11:16 | 1418911 traderjoe
traderjoe's picture

Some of your posts are intelligent, some stupid. You seem to believe in the inevitable collapse of the Ponzi/compounded growth system. If not PM's - what is your preferred savings device?

Fri, 07/01/2011 - 11:37 | 1419037 trav7777
trav7777's picture

I've been over this.  Not silver.

2 reasons, first is that silver is primarily no longer a PM.  It's an industrial metal.  I proved this by reference to its consumption metrics.  All consumption growth in the past 10, 20 years was in industrial use.  The wide majority of its demand is industrial.

Second reason is that the shit is not value-dense enough to be a good savings device.  If you picked a bugout ranch downwind from a nuke plant, you may have to leave rather abruptly.  If the starving zombie hordes surround your ranch and master the sophisticated technology of fire, you may have to leave abruptly.  How much silver do you suppose you can pack on your back?  In such a situation, there's nobody alive who wouldn't rather have every ounce of wealth in gold.

I like platinum too but it's also industrial primarily but it (and Palladium) is so comparatively rare as to be precious by definition; silver is not.  Pt and Pd have less than 1/10th the annual production of gold, which is around 1/10th annual production of silver.

If I shit on silver, don't put the strawman up of "PMs" as if shitting on silver means shitting on PMs.  The two terms are not the same and not coextensive.

Fri, 07/01/2011 - 12:36 | 1419146 traderjoe
traderjoe's picture

Fair enough. Thx for explanation.

Edit: I will say that I don't disagree with the dense/mass/store of value question. But what makes silver bulky, IMHO, is what makes it a good money/currency. Only a couple of shavings of gold would pay for a loaf of bread, but a silver dime does nicely. 

Fri, 07/01/2011 - 15:46 | 1419868 Hacked Economy
Hacked Economy's picture

Exactly, traderjoe.  You seem to "get" it.

For wealth preservation...gold is king.

But for good money/currency...silver is superior.  Silver dimes, indeed.

All this bickering back and forth from the goldbugs and silverbugs is actually quite humorous.  Both metals have their place in a smart person's portfolio, albeit for different reasons.  It's best to have both to balance your exposure to the winds of change.

If we truly find ourselves facing a SHTF / TEOTWAWKI scenario in which there's an economic collapse, hyperinflation, and subsequent restructuring, then silver will be best for barter, but gold will be best to safely transfer your wealth through the storm to the other side, and to whatever new currency system we'll have.

Of course, if there's a true economic collapse, then the sudden decline of silver's industrial consumption will dramatically change the value of the metal, as it will shift heavily overnight to being primarily an investor's metal again.

Just get 'em both and sleep well!

Fri, 07/01/2011 - 12:50 | 1419318 Attitude_Check
Attitude_Check's picture

Gloating over others potential misfortune.  You REALLY ARE AN ASS AREN'T YOU.

Holding all my assets in $'s or other promises to pay will be SOOOO MUCH BETTER.  YOU are a TOOL, you are clearly not stupid, so you behavior is intentional - now who pays you off HMMM?  Who's book are you talking -- Yours or someone else

Fri, 07/01/2011 - 14:28 | 1419675 trav7777
trav7777's picture

translation:  "I, Attitude_Check, am one of those bagholders"

you were warned, kid.

Fri, 07/01/2011 - 10:10 | 1418668 Spastica Rex
Spastica Rex's picture

Bookmarked

Fri, 07/01/2011 - 10:39 | 1418640 Mercury
Mercury's picture

There's a difference between "acceptance" -  as in you're finally cool with it and have made peace with the reality of the situation and  "acceptance" as in you're bent over, splayed out and physically positioned to accept what is being forced upon you.

Speaking of which, where's Benjamin N. Dover III  when you need him?

Fri, 07/01/2011 - 10:27 | 1418727 Franken_Stein
Franken_Stein's picture

 

There's some stage missing between denial and anger, which is ridicule / hubris.

 

Fri, 07/01/2011 - 11:44 | 1419046 mickeyman
mickeyman's picture

And don't forget the stage when your drinking buddies mock your misery.

Fri, 07/01/2011 - 10:47 | 1418833 Yancey Ward
Yancey Ward's picture

There is no way this analysis is correct!

And your promoting it really, really steams me!

Can we agree to not do this any more?

Seriously, I can't sleep, eat, or fuck any more.

Of course, it is spot on.  I always knew that.

Fri, 07/01/2011 - 10:58 | 1418873 jpalace
Fri, 07/01/2011 - 10:58 | 1418874 oogs66
oogs66's picture

they missed the greek minister of finance telling speculators they would lose their shirts

Fri, 07/01/2011 - 10:58 | 1418875 Stuck on Zero
Stuck on Zero's picture

These are the stages leading up to recovery from brain injury (www.tbiguide.com):

1) Confusion and Agitation

2) Denial

3) Testing Phase

4) Uneasy Acceptance

Five Stages Of Grief (http://www.memorialhospital.org/):

1) Denial and Isolation.

2) Anger.

3) Bargaining.

4) Depression.

5) Acceptance.

The twelve steps to overcoming alcoholism (AAA):

Step 1: Honesty

Step 2: Faith

Step 3: Surrender

Step 4: Soul Searching

Step 5: Integrity

Step 6: Acceptance

Step 7: Humility

Step 8: Willingness

Step 9: Forgiveness

Step 10: Maintenance

Step 11: Making Contact

Step 12: Service

So my question is: Is bankruptcy easier to cope with than brain injury, grief, or alcoholism?

Fri, 07/01/2011 - 11:30 | 1418999 OldPhart
OldPhart's picture

A side topic...

Denmark enacts border controls

 

Fri, 07/01/2011 - 12:04 | 1419131 THE DORK OF CORK
THE DORK OF CORK's picture

There is still a mechanism to prevent defaults in the periphery.

For example credit deposits are guarrenteed by the state in Ireland - for the indivdual punter it would not matter if his deposit is credit money in the bank or goverment money in the Post office.

If all credit deposits is converted into goverment money Ireland would merely own its own debt and so therefore the domestic money supply would not be externalised.

Of course all credit sensitive assets would revert to their cash price - risk deposits owned by both the ECB & remaining Bond holders would be left with the mortgage paper - they could not get all their money back under a cash economy.

If for example the leverage between private credit & Goverment money is 5 times then convert ALL PRIVATE LOANS to 20% of their oringinal value.

The economies in Ireland & Iberia would rapidly reach equiliberium although the Goverment debt in Greece would have to be written off directly.

The ECB can eat the losses - its a big boy.

If this or something similar does not happen then its best to leave this club.

Fri, 07/01/2011 - 12:50 | 1419314 Attitude_Check
Attitude_Check's picture

.

Fri, 07/01/2011 - 20:36 | 1420577 taca
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Sun, 07/03/2011 - 17:07 | 1423076 TruthHunter
TruthHunter's picture

 

"I've been over this.  Not silver.

2 reasons, first is that silver is primarily no longer a PM.  It's an industrial metal.  

I like platinum too but it's also industrial primarily but it (and Palladium) is so comparatively rare as to be precious by definition; silver is not.  Pt and Pd have less than 1/10th the annual production of gold, which is around 1/10th annual production of silver.

If I shit on silver, don't put the strawman up of "PMs" as if shitting on silver means shitting on PMs.  The two terms are not the same and not coextensive."

 

You forget one aspect of this.  That is the factor of liquidity.  With gold at ~$50 a gram,  and the smallest gold denomination 3 grams, its just not for everyday use.

 

 Maybe someone should market gold foil in fractional grams. You could mount it in clear  containers that could be exchanged with special tools.

 

Until then, Silver has its PM place in the scheme of things.

 

 

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