"In Regione Caecorum Res Est Luscus"

Via Mark J. Grant, author of Out of the Bix,

“In the land of the blind, the one-eyed man is king.”
[In regione caecorum rex est luscus.]
                       -Desiderius Erasmus
I have been following the Greek saga since January 2010. I have seen more mis-information, more lies, more deceit than I ever read about in some spy novel. This has all been coupled, of course, with more promises, more absolute guarantees that tax loopholes would be closed and revenue collected and more assurances of the sale of the nation’s assets. I think many of these people used to be under the care of Nurse Racthed and the Big Chief just never got them out and they ended up in politics.


Last Friday the stock market went up, some have speculated, based upon some new, new Greek deal. I am awaiting the outcome and I will not speculate this morning but the one thing I know, with certainty, is that unless someone or another forgives one heck of a lot of the accumulated loans that Greece couldn’t pay their debts without Zeus bringing down the crown jewels from Mt. Olympus. I suspect that the Troika will hand them more money because they are frightened of the consequences but I await the decision. It was rumored, over the weekend, that the Prime Minister of Greece was studying the old mythology and when asked why exclaimed, “I am looking for loopholes.”


We are in a time, a different time than in the recent past, when decisions will have to be made. The central banks have done everything from hand out money to provide “save the world” speeches but their day is now minimized because there is almost nothing left they can do. As an investor it is important to note the changing of the guard as the central banks’ influences wanes and the next moves center upon political will and national interests. If we regard America’s fiscal cliff or the pending decisions about Greece or the separatist movement in Spain or the lack of a budget for the European Union; it is all politically centered and the battlefields are rife with perhaps surprising decisions. In each of these four arenas the easy answers have now come and gone. The “can kicking” if you will is over. The road has found its way to the crossroads and new directions will have to be chosen and it is in the choosing where the risk resides.


The world has been flooded by the cash created by the central banks but that water is now receding.  Even with all of the cash created Europe is sinking deeper and deeper into a recession with China in a major slowdown and America a whisker away from being in a recession as well as affected by the global economy. The real numbers, the real liabilities are beginning to tell on Europe in serious ways and all of the made up numbers, the falsification by methodology of counting Europe’s debt to GDP ratios is coming to a head. Choosing not to count liabilities does not mean that they are not there and recession always spurs nationalism as it detracts equally from grander ideals.


We are in a “different moment” now than in the past several years and that is the point of my commentary today. Promises have come and gone, the central banks have supported the fiscal system as political decision making waned with indecision and the difficulties of the choices. Complacency took hold as a kind of “everything will be fine” mentality inundated the market places. Soon, in my opinion, everything will not be quite so fine as the politicians in America and Europe have to earn their salaries and the ramifications of many decisions are going to be unpleasant as they are released.
“When complacency reigns it is the smallest of sparks that often reignites the fire.”
                        -The Wizard