He Who Knows All Things was wandering through Euroland last week. That's pretty much what he does these days, carrying a bit too much age and far too much money around to do much else, he wanders. He called the weekend.
"Hi. You OK? Thought you would be back on line Friday."
" Yeah, I'm fine, thanks for asking. Surgery was apiece of cake. That was the plan but I had no idea what the hell was going on with anything so I thought, 'why bother.' You back or still abroad?"
"Abroad." Will you ever enter into this century? Yes, I'm back."
"Not if I can help it. How's the mood over there?"
"They all hate us...well, perhaps that's a bit strong. Dislike is a better word."
"Any real reason?"
"The same. Don't like Bush but can't really remember why, Don't trust Obama or anyone around him. Don't understand our politics. Blame everything on us--especially the Ukraine--which of course they cocked up to a fare-thee-well. Fins and Poles are scared to death about the Russians and look to us. Everybody does as well but wont say it...too busy disliking us."
"So we are this century's Tommy Atkins."
"Who."
"Tommy Atkins." Don't you read Kipling."
'...For it's Tommy this and Tommy that and Tommy, 'ow's your soul"
'But it's thin red line of 'eros when the guns begin to roll.'
Tommy. Great Poem."
"Yeah, well, whatever."
"And our Greek friends? I confess I think I might have been wrong. This might really go bust."
"The Euros don't seem to be troubled. Like you and me they think something will get done in the end, but I must say the latest doesn't sound very good. Last I heard the Euros broke off talks and there is serious talk about closing the banks. The ECB is in a hell of a spot. The Greek banks can't survive but..."
"Every Euro they lend them increases the debt."
"Exactly! I can't say I'm positive, but I think they have reached the end of the line. If there was a glimmer of light Draghi would stay the course but I think things have broken down completely. It's no longer economics, hell, it's not even so much about politics. These people don't like each other very much. The politics are in Athens and Berlin, not in the negotiations."
"Well, we said this all along. Can you imagine Angie doing a fold job at this stage and having to listen to the Rock Star giving a speech a week as to how he, singlehandedly mind you, brought Angela Merkel to her knees! Not going to happen my friend. I think the Euros better start worrying 'cause if things stay the same it's going to get ugly Monday morning."
"There's another problem. You know who's the putative head of Europe if this goes to hell? Draghi, that's who. Angie..."
"No my friend, the putative head of Europe is Putin. But I take your point."
"Yeah you're right but if the Greeks go it's Mario who suddenly turns Dutch and has his finger in the Dike. No checking here or consulting there. He's running the show and if it appears that he's not..."
"Yep. Contagion rears it's ugly head. But you know what? I don't think that is going to happen. I have the feeling that there is a far greater realization on the part of Club Med as to what they have, whereas the Greeks wont know what they got 'till it's gone." It will hold together.
"How the hell did they once build the greatest civilization in the world and be so dumb? I mean there was a deal laying there. Nobody' s stupid enough to believe that with a debt to GDP ratio of 180% there was an economic solution. These clowns have nothing to sell but sunshine, olives and sponges. Of course there is going to be debt relief but that has to be sold up north and that take's time, due not doubt to a serious lack of candor on the part of the politicians! Take the pain and a bit of humiliation and live to fight another day!
"You're right of course, but have you thought about the even bigger problem of a Grexit from Angie's and the Euros' standpoint?"
"Wasszat?"
"Suppose the Greeks make it work..."
"Oh.............no I hadn't"
Nothing good happened for the rest of the weekend and as expected, markets were skittish at the open but there did not seem to be any signs of panic even in the face of the ECB throwing in the towel, as predicted. Nothing good happened all day and at the close the DOW was down 350 points. The 10 year fell from 2.48% on Friday to 2.34% today. I don't know if this constitutes panic but it is sure as hell attention-getting. The referendum will apparently go forward on Sunday as announced. Somewhere out there somebody has lost a hell of a lot of money and I suspect that there will be no good news tomorrow. I'm worried about that because as HWKAT said, the Euros at least and no one over here was taking this very seriously...until now. Tomorrow's opening should be watched carefully. The trend will start in Asia where not much good is going on either. We seem to be in the midst of the great Chines curse: "May you live in interesting times."
Oh yeah, we are also looking at a $60 billion default from the Commonwealth of Puerto Rico announced today. Surprise, surprise.
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