You've Had Time to Prepare for Greece

 | Feb 07, 2012 | 6:53 AM EST  | Comments
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The velocity of events is an underrated concept. When there is a velocity, a high-intensity crash, you get a lot of damage to a lot of different players. When the velocity of the crash is in slow motion, you minimize the damage as people can prepare and be ready.

That's a simple point we all understand it when it comes to our daily lives, but we seem to forget it when it comes to our financial lives.

Every day I come in and Greece is not resolved. We are now annualizing one full year of this nonsense and, needless to say, it is nonsense because we all know that it could have been solved a long time ago by kicking Greece out and circling the wagons around everyone else except those who kept their debts at obscene levels.

But the velocity here is about the speed of a tortoise. You can see that tortoise coming. It doesn't sneak up on you. In the interim there has been much thought about what will occur with a default and if you are not in a position to handle the default, whether you are a central banker or a private banker, then you're in trouble as pretty much everyone else is prepared.

If you are a bear, you would be quick to tell me that there are plenty of people who aren't ready, but that presumes that we are back in 2008 when the whole system was woefully behind the train of events and was clearly NOT ready and the surprise factor was horrendous.

Now I know that when Greece is resolved either way there will probably be a selloff, but again it will be manageable not catastrophic simply because of time lapsed.

In fact, that was the whole unseen positive about what happened at the end of 2011. Just when everyone was predicting that the world would come to an end, when Italian bond rates hit 7%, the authorities put plans into action so that the world wouldn't end. The guys who looked real smart because they said the world was going to end ended up missing a monster rally that most of them won't even admit to having happened. They still think that those gains from the sovereign bonds are ill-gotten.

It's convenient to act as if the market didn't' go against you. That's what those three Credit Suisse guys just got indicted for in the incredible mortgage bond case that the Southern District of New York just brought.

But it is also wrong.

The simple fact is that we got a rally in sovereign paper and at the same time the policy makers have given everyone a chance to be set for the inevitable Greek conclusion.

The only ones not set are the ones who keep babbling to the press that every tick down in the market is because of Greece.

Too bad they are there to chime in with that excuse every time we give up some points. Lots more people would make money if they didn't. But why should this time be different?

_______


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