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How A "Eurozone Breakdown" Became A True Black Swan Event
By definition, a "fat tail", or "black swan" event is one which nobody anticipates. Which, in this case, is precisely what happened with recent developments not so much out of Greece, but out of Brussels and the proposal for a Greek "time out" which as AEP observed "converted the eurozone into a hard-peg currency bloc" thus ending the myth of an "unconditional" monetary union once and for all.
As the first chart below (which we presented one month ago) shows, last month the fund managers responding to BofA' fund manager survey said that a "Eurozone breakdown" was was the third biggest "tail risk" to global markets. What is much more notable is that just one month earelier, in May, not a single respondent even mentioned this as a risk.
Fast forward to July when "Eurozone breakdown" is suddenly perceived as the biggest tail risk by all those surveyed.
Ironically, without a single survey respondent expecting Greece to be an issue just two months ago, the "smartest money" around did in fact confirm that what happened in Greece in the past 2 months was indeed a "black swan."
The question now, with events in Greece front in center in everyone's mind, is what the real "fat tail" will be next: after all, and by definition, nobody can anticipate what a black swan is until it is upon us.
Just like in the case of the "Eurozone breakdown."
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The Greeks can still make this happen. I get the feeling enough of their parliment has been paid off in underage boys & Porsches to not make this happen though, so next month this will be zero, and Schultz can get back to telling all of us how fixed Greece is.
Black Swan… ain’t it a bit racciss?
Is there a more PC term for the poor bird, like Black Dodo? ;-)
Looney
Change Black Swan to LGBT Swan event
Change the chart label to "What did the MSM tell you is the biggest tail-risk"
African American Swan?
MY LOL of the day. Thanks!
A black swan isn't racist, but a BLACK FACE swan IS!
So it's
https://upload.wikimedia.org/wikipedia/commons/2/2b/Black_swan_jan09.jpg
vs
http://media.web.britannica.com/eb-media/32/88432-050-51E26C26.jpg
Me thinks the swan does have more meat and is just around the corner....
If goldman can buy all of congress for 1-2 million, imagine what you can buy in greece? throw a few hundred thousand euro's around and you'll have your multi billion bail out/ slave nation before the ink dries
It doesn't matter who buys who. Whatever happens, Greece STILL can't pay off any of the debt, either before the new bailout, or after with an additional €86 billion on top. And with a totally uncooperative population, together with widespread strikes, it just ain't gonna work.
Greece is done. Until they Grexit and revert to the drachma.
I'm officially naming this the "Schauble Foible" :)
"Nobody could have seen it coming"!
black swan? lol
european markets are up 8% in a week
us markets near all time high
the only black swan i know of is the crazy guy from Phoenix Capital and his apocalyptic forecasts
I think "The Donald" also qualifies.
Not the issue, the issue is one of where the Eurozone is fatally flawed and will begar each member working to maintain status quo.
The EU and the Euro is a grand failure.
The EU perhaps, the EURO however is a spectacular success.
Remember it is still only a few years old, and as I am finally seeing around the place, that people are slowly realizing it is the only currency to have severed the link to the nation state (and also to gold).
The EURO was built to outlast the decline of the dollar. And imo it will.
Cheers!
Why are Greeks not out in force protesting this coup that transfers power and assets to Brussels and Berlin?
Greek debt crisis: Nigel Farage urges Greek MPs to reject deal and calls for protests in AthensMr Farage has called for Greeks to take to the streets, saying he would join them if only he was an Athenian himself.
It was the latest sign of anger from Mr Farage at the Greek Prime Minister's decision to backtrack on its previous opposition of a very similar reform package that was rejected by Greek people in a nationwide referendum last week.
On Friday he accused Alexis Tsipras of having "caved in to the EU"
http://www.independent.co.uk/news/uk/politics/greek-debt-crisis-if-nigel...
Why should the Greeks protest being able to continue to get money from ATMs?
They are screwed and they know it. What is to protest? That lenders are willing to lend more?
They are in a hard spot and if they get what they would be protesting for they would be in a worse spot....even if they had a touch more 'dignity'...whatever that counts for...
"Why should the Greeks protest being able to continue to get money from ATMs?"
Careful, careful, you're straying from the euro-never-did-anything-for-greece fact-free narrative.
It's rather hard not to be in a "hard spot" and "screwed" when you've voluntarily and at every opportunity sold your economy, government, dignity, self-respect, sovereignty, land, natural capital, and descendants born and unborn to foreign creditors in exchange for a mere 20 years of free shit-apalooza gravy train party-time (oh but what a party it was).
And who are we to say, in light of Greece's modern history up to the 1970s, that it was not worth every figurative penny? The clear majority of Greeks who refuse to abandon the eurozone, default, and purge everything certainly seem to think it's worth it.
More evidence that the "smart money" can't think further ahead than lunch.
nobody can anticipate what a black swan is until it is upon us.
How about they take all depositor money and pay off all government debt (all weastern countries)
And the sweatner..................abolish income tax....................It's for the kids and right for the country!
It's odd that Euro pushing countries to get bailin laws done within 2 months............something cometh
http://www.goldcore.com/ie/gold-blog/eu-gives-countries-two-months-to-ad...
Judging by the US indexes, a new round of QE to be announced any day.
The more I watch this economic ditty unfold, the more I conclude ‘European’ folk can’t manage money.
Each bloodline has its specialty. And the Europeans are always going bust. Look at history.
Stawks are up, so much for tail risk Our central planning banker overlords have evrything under control.
not exactly a black swan....it is well know that japan, USA, italy, france, etc...will have to default...the only issue is timing
Yes... the "hot potatoes" of debt are getting heavier and hotter by the minute. Someone is going to drop one soon. Then it is going to get ugly and fast.
The very idea tha central economic planning could be sustained in spite of everyone wanting to live on the doll and not pay taxes... well here is your cake. Now eat.
"everyone wanting to live on the DOLL and not pay taxes..."
Now THAT is a good pun.
I think you meant, "everyone wanting to live on the DOLE and not pay taxes...."
[Living on the DOLL on the DOLE might work.....or living on the DOLE on the DOLL.....]
Errr what happened in Greece?
if everyone knows about it. How can it be a black swan event?
One has to understand chaos theory to see how black swans happen. The eurozone meltdown fits into the science without issue.
You need to say more to make your point, but I agree. The item I discuss below fits. You can't know all the variables when you are out in "nature" that will affect your model. Add in that there are "interventions" all the time, and you are begging for the shape of the strange attractor to radically flip on you, out of seemingly nowhere.
What of the Japanese Samurai bond last night? Does any one know if Greece made the payment?
There are things Greece has going on that are outside the Trioka. Is the Trioka gonna cover all those with "bridge loans" to keep the whole thing propped up?
One of those, for any of the F-PIIGS, could blow this thing wide open.
I think there are too many variables in play. A ball will get dropped. It is a matter of attention, never mind finances.
According to the Financial Times, august publication with total credibility (!?!) ...
"Greece Makes Samurai bond Repayment"
http://www.ft.com/cms/s/0/6dbc7e2a-29cc-11e5-8613-e7aedbb7bdb7.html
[making minimum payment on the blue Visa card with a cash advance from the yellow VISA card which was paid with a cash advance from the green MMastercard (or was it the white one?)....... ]
Greece Fire has been extinguished.
Move On.
Thanks.
According to the book black swan is something we never thought of. Like 9/11. Eurozone breakup is just a matter of time
German financial failure would do it.
The ice they are skating on is so thin, they need waterskis and a lake with a steep incline.
Certainly some unusual activity in the gold market must be viewed as a risk element for the current system. Now we have a tame 'fractional reserve gold market' supported by bullion banks promising to deliver physical in the future. If it becomes an issue (the banks obviously cannot deliver much physical gold at all at $1150 per ounce) it could happen fast. I suppose there could be increased demand by the small fry but more likely some large player could make a bid for physical with dramatic effects on price. This would kill the bullion banks and all those FOREX contracts XAU/XXX.
This would probably only occur in a panic started by some other event but at some point a rush to physical could certainly occur.