From Mark Grant, author of Out Of The Box
Carry the battle to them. Don't let them bring it to you. Put them on the defensive and don't ever apologize for anything.”
-My fellow Missourian, Harry S. Truman
“Gear up!” That is what I say to you this morning. Open your closet door, drag out the flak jacket from 2009, lace up your boots, unlock your guns, bring out the ammo and get ready to go at it one more time because the placid fields of Verdun, long silent, finds the Germans and the French at it once again and we are all about to be dragged back into it; like it or not. There is quite serious business afoot and, just like in war, the political statements made are nothing more than propaganda to mislead the enemy and the enemy is YOU.
“A good battle plan that you act on today can be better than a perfect one tomorrow.”
-General George S. Patton
YOU are the portfolio managers and overseers of capital that the European politicians want to mis-direct, assure in the politest of terms and provide a constant barrage of made-up data to in the hope, and now in the last-ditch hope, that you will not abandon their playing field and withdraw your money. Some of the money in Europe cannot find another home because it is coerced or forced or beholden to Europe through a variety of spider webs concocted by various nations and the European Union. That money, then, is locked up and cannot withdraw. The money that can be withdrawn though is fleeing now as the dangers grow with the passing hours and the denials of various governments, the IMF and the EU and the pitch of the denials only enforce my rational fear that various crises have, in fact, spun out of control. Having lived through and predicted the calamities in Greece, Ireland, Portugal I hear the distinct echoes of days past right before the Falls of Empire that are rebounding off the mountain peaks once again. Listen! Hold your ear to the breeze and you too may hear the screams of anguish; the faint calls to battle.
“The bugle-call to arms again sounded in my war-trained ear, the bayonets gleamed, the sabers clashed, and the Prussian helmets and the eagles of France stood face to face on the borders of the Rhine.”
Just because you can only vaguely hear the battle nor see the encampments does not mean that that the fight has not begun. It is the socialist countries on the left and the austerity bastion, the countries with money, on the right and they are locked in the push and shove of dominance. The have-nots want the riches of the haves to be employed and the nations with higher standards of living do not wish to give up their place in the world order to support the weaker nations and to see their standards of living decreased by the process. The European Central Bank is caught in the middle and yesterday’s pleas by Draghi represent the squeeze of the vise grips in which they are caught. The ECB has been forced to accept collateral, securitizations that have a value of pennies while other claims are made but loans are now coming due and not being paid, Real Estate values have plunged in many countries and are not being recognized and the assets on the books of the ECB are nowhere near what is being publically touted and Mr. Draghi is more than well aware of the implications and consequences and is screaming out into the void in frustration. It may not be yet that the financial markets in Europe are locked-up but I can assure you that the political markets are already locked-up as no one wants to admit anything or take the hits necessary to bring the valuations back from fantasy land to the land of reality where the actual cannot be denied.
It is to be, as I have stated many times before, Treasuries up, equities down, the Dollar up against the Euro, credit spreads out and risk off, off and off. Counterparty risk must be assessed again and again and don’t just look at the bed sheets but peer under the bed with a real seriousness of purpose. Just because there is no place to hide, and there is not, does not mean that preparation is not called for once again. Greece, Spain, Portugal and Italy are all worsening infections and the diagnosis, having been wrongly made, and mostly being ignored out of the fear of having to use the prescription, will lead to the wrong medicine and the medicine being wrongly applied.
“I call to mind the navy great
That the Greeks brought to Troye town,
And how the boistous winds did beat
Their ships, and rent their sails adown;
Till Agamemnon's daughter's blood
Appeased the gods that them withstood”
-Henry Howard, Earl of Surrey