Via Mark J. Grant, author of Out of the Box,
“You do not remember the days; you remember the moments.”
We have had two Greek moments, a Portuguese moment, an Irish moment and we are about to possibly have the “moments of our lives” during the next two weeks. America’s primary moment will be tomorrow when the people of the United States exercise their constitutional right and choose a President and a significant amount of the members of Congress. One thing that can be said with certainty is that we have a choice and a real choice. In my mind it is not just a decision of the typical Democratic or Republican politics but a choice between a far more Socialist administration and a Capitalistic option. I find neither choice to be either far left or far right but it is a clear choice without doubt. Personally I am in favor of a safety net for every American but I am not in favor of so many social programs that there is a clear transference of capital from those who have succeeded to those that have not. I also find Mr. Obama’s attacks on Wall Street, on banks and on those who have stood on their own two feet and made something of themselves to be offensive and outside of what I consider to be a core American value which is to applaud and respect those that have worked hard and gained. Finally my decision was molded by politics at the very local level, my house, where you can only spend what you can afford and not a penny more and the policies of the last four years, in my view, have violated that principle. Thus I made my choice. Tomorrow will be a significant moment in time.
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
-Charles Dickens, David Copperfield
While America turns inward and pays attention to very little else besides our election on Tuesday we may well find ourselves peering outward on short notice. We are told by Greece that they have one week on money left to pay their bills. Here we are on the brink and it is still not clear if the IMF will fund the next tranche or if a number of countries in Europe will pony up either. If there is an extension of Greek terms it is still unknown who is going to pick up the tab for another $40-45 billion that will be required to implement that plan. Back in Athens it is still quite murky whether there are enough votes available to pass the new round of austerity measures demanded by the IMF and the EU. We will have a new moment with all of this without question but the sound of it may very well be heard as a BIG BANG as the friction on the Continent causes a fire to rage out of control where Greek politics or European politics erupts as the long and winding road finally reaches its end. I advise that you pay attention here; decisions will be made as forced by the financial condition of Greece and can kicking is no longer an operative solution now. I predict it will get ugly and real ramifications will cause real shudders and I would be prepared for what must now come as the financial hurricane of Europe hits the shores in Athens.
“It was as if, at moments, we were perpetually coming into sight of subjects before which we must stop short, turning suddenly out of alleys that we perceived to be blind, closing with a little bang that made us look at each other--for, like all bangs, it was something louder than we had intended--the doors we had indiscreetly opened.”
-Henry James, The Turn of the Screw
In the meantime one of the Danish banks, after inspection by their central bank, went bankrupt over the weekend. Spain reported out their unemployment rate today which exploded by another 2.7% in just one month. Spain will soon be forced to its knees by their regional debt, by their banks while the ECB is under fire that they lent money to the Spanish banks in an inappropriate and perhaps illegal fashion. I consider the next two weeks to be a moment of “critical mass” where a systemic explosion is not out of the question nor even an outlier given our current circumstances. Grant’s Rules 1-10 “Preservation of Capital” should be uppermost in your minds now and I would suggest a healthy amount of liquidity during this time period. Watch, especially, your counterparty risk and be mindful of the implications of a Greek default because this baby could crawl either way and in a hurry.
“She stood for some moments gazing at the sisters, with affection beaming in one eye, and calculation out of the other.”
-Charles Dickens, Martin Chuzzlewit