From Mark Grant, author of Out of the Box,
The Trifling Consequences Of Cyprus
“Expect the best. Plan for the worst. Expect to get surprised.”
-The Wizard
Cyprus downgraded to Caa3 by Moodys and not a snivel, barely mentioned anywhere and thought of “no consequence” by all but a trifling few. It is not just the size of the nation but the suit of armor pronounced by Mr. Draghi and, while not tested to date, it hangs proudly in the vestibule for all visitors to note and admire and point to proudly in moments of troublesome aggravation. The country is too small, the amounts of money required but a few days work at Volkswagen or Siemens. Yet I recall Arch Duke Ferdinand and the beginning of World War I. An event thought of as “no consequence” by all but a trifling few.
“His ignorance was as remarkable as his knowledge. Of contemporary literature, philosophy and politics he appeared to know next to nothing. Upon my quoting Thomas Carlyle, he inquired in the naivest way who he might be and what he had done. My surprise reached a climax, however, when I found incidentally that he was ignorant of the Copernican Theory and of the composition of the Solar System. That any civilized human being in this nineteenth century should not be aware that the earth travelled round the sun appeared to me to be such an extraordinary fact that I could hardly realize it.”
-Doctor Watson
You see Cyprus will raise the principles upon which Europe now rests and the decisions will cast a shadow far past the economic consequences as the conclusion is meted out to the rest of us. Was Greece in fact a one-off event or did Europe mean Greek speaking people? Will Cyprus’s refusal to shed state assets and to raise taxes raise the ire and perhaps the rancor of those resting comfortably in the Bundestag enough to cause their Prussian backs to stand-up straight again and refuse on principle regardless of monetary minutia? Will other European nations roll-over once again like dogs on a hot summer day and bow to the Bürgermeisters of Berlin and accede to the demands of “More Europe” which is the German translation for “More Germany?” I would not be casting Cyprus so listlessly aside. The resolution of pending bankruptcy here may indeed spring some interesting surprises.
“When a resolute young fellow steps up to the great bully, the world, and takes him boldly by the beard, he is often surprised to find it comes off in his hand, and that it was only tied on to scare away the timid adventurers.”
-Ralph Waldo Emerson
You hear it now all across Europe. “We are out of the woods, the crisis has ended, the worst is over” but I take scarce solace from these comments. The numbers have been falsified, the figures have been altered, and that which should have been counted as been ignored as a matter of political expediency. Bills uncounted do not mean that they do not have to be paid and obligations ignored do not erase them. The problems of Greece, Cyprus, Spain and Portugal have been wallpapered over and the “new look” has been sung to the Press and the citizens alike but the wet plaster remains behind the façade and the upcoming peeling will commence in our New Year. More money equates to lower yields in the short run and assurances of health prevail in the world for the moment but the raw data tells another story as capital diminishes and debts build and uncounted liabilities surface once more.
2012 was a year of a vast and complicated charade. 2013 is likely to be a year when the resplendent masks are removed.
“It is not necessary that you leave the house. Remain at your table and listen. Do not even listen, only wait. Do not even wait, be wholly still and alone. The world will present itself to you for it’s unmasking, it can do no other, in ecstasy it will writhe at your feet.”
-Franz Kafka