Where Black Swans Lay
SUBHEAD: What if the same speculators laying siege to the Parthenon turn their eyes towards Sacramento or Honolulu? Image above: Nest of the once mythical black swan with cygnets and four hidden eggs. From (http://www.pbase.com/sheils/image/61019851) By Ilargi on 10 February 2010 in The Automatic Earth - (http://theautomaticearth.blogspot.com/2010/02/february-10-2010-where-black-swans-lay.html) It’s becoming hard not to wonder if all these investors and speculators who are busy betting against Greece ever get that wake up sweat-drenched in the middle of the night feeling that someone's playing them for a bunch of fools. So, Greece is that bad off, huh? So much so that everybody's gaze is focused on Athens, even when its GDP is way smaller than more than a few US states. Can the Greek situation bring down the entire eurozone? That’s a major maybe, far too doubtful to bet the house on. I wouldn't underestimate the possibilty that, trying to start a fire in the Mediterranean, many a money manger will end up with burnt fingers. The herd in action, down the hill. What does seem certain is that the costs of servicing and issuing debt will rise considerably for Greece and other weaklings among global nations, including the US and UK. And that may have far more far-reaching implications around the world than whether Greece is bailed out in some form or another. JP Morgan states that the UK is in as bad a shape financially as it was in the 1976, when the IMF was called in to bail it out, and that the pound sterling could see a "marked fall" in value on account of this. Britain should be so lucky. A currency can fall only relative to other currencies (if we leave gold and other commodities out of the equation for a moment). And which currency would then have to rise vs the pound? The Euro? Hmmm, maybe not. The Yen? Maybe short-term, but Japan is not exactly the strongest sibling out there; it wouldn't take much for serious questions to be raised about the country. We can all spell Toyota. It won’t be the renminbi either, since China is dead in the water without its exports. That leaves only one major candidate, the US dollar. Which is also highly dependent on a weak currency, but will still be left holding the bag on this one unless it finds some ground-shifting way to beggar all of its global neighbors. Being the reserve currency is a two-faced coin. It wouldn't surprise me one bit if the main consequence of the Greek issue as it plays out today is not the demise of that country, or of the Eurozone, but instead a dramatic acceleration of the world-wide financial truth-finding process that has been lying dormant far too long inside faked balance sheets, moldy bank vaults and make-’em-up-as-we-go accounting standards. Most of those theatrics can only exist as long as they're not exposed to daylight. And that's precisely what Greece may provide us with: a trigger to start a process, a reason to acquire a clearer view of reality. What if the same speculators who now lay siege to the Parthenon turn their eyes towards Sacramento, Hanoi, Tokyo or London (or Honolulu)? Every single possible target will be required to show its strengths, and its weaknesses. And when put under actual pressure, will Greece turn out to be the weakest link in the entire chain? Will it offer the greatest rewards to the speculating crowd? Sure, if Germany saves Greece, there’ll more wounded lining up. But how is that different from Obama deciding to hand-feed California? Plenty other states would be at the door within seconds, if they're not already there. These developments always tend to begin in unexpected places, the parts of the world where black swans lay their eggs. Is Greece unexpected enough for you? .