GETTIN SCARY

I not sure I should keep doing this.  A couple of days ago the whole damn New York Times started to agree with me and 10 hours after yesterday's post the whole damn world starts getting the idea that maybe this Greek thing is a bit of a farce and starts selling everything that isn't nailed down beginning with the banks about which we have been warning for weeks.  Didn't somebody make a movie about some little kid dreaming bad things that suddenly began happening?  Now I don't want to be the bearer of bad tidings but maybe there's a buck in this somewhere.  Then again, if there is, Carl Levin will probably start calling me a short-seller and haul me in front of his sub-committee.  OH, the humiliation!  Then again, maybe I'm dreaming.  Oh well...

The funny thing about all of this is that it challenges a number of our well-conditioned beliefs as to how the world should work.  Lately, the fashionable word in financial and regulatory circles is "transparency;" the more we know about...well, anything...the better off we will all be.  Problem is I'm not sure that we weren't in better shape when there was a whole lot of guessing going on about the true state of affairs and problems could be approached in a quiet, deliberate manner without half the world looking over your shoulder.   A case in point is the state of the European banking system.

Whether an individual institution or a group of institutions are facing difficulties depends little upon reality in today's marketplace.  Perception is the new reality and perception can be created and perpetuated by either deliberate actions on the part of a few interested parties or purely by accident through the mechanism of pricing on credit default swaps.  It's all out there and it's all hanging out.  It is not the existence of CDOs themselves but the public nature of the valuation of the same and the direction and volatility of said valuation that can turn a good situation bad and a bad situation awful in the blink of an eye.  Once perception begins moving in a certain direction it is very difficult if not impossible to change direction.  In 1983 the U.S. banking system was effectively bust but no one REALLY knew it.  People could guess but there was no mechanism to really profit on the guess work as there is today.  The result then was the creation of a substantial time frame in which one could fix the problem; compare that to the ten minutes or so the Treasury and the Fed had in September of 2008.  So, let's hope this Greek thing holds together and the tumult and the shouting dies in the next few days.  Otherwise, we might be in for a rough time.  Of course, the demonstrations planned for tomorrow aren't going to help and did you know the Greek navy went on strike?  Far cry from, "England expects every man..."  No wonder the Elgin Marbles are in the Brit Museum.  Shame.  The Greeks could have hocked them.