Had a debate today with some people about the importance of Slovakia. I think that Slovakia stands for everything that is wrong about the European Union. Slovakia shouldn't matter. We are way too late in the game for that country to play a role. That's like Rhode Island holding up the United States.
All that said, for a moment I thought to myself, is this the "enough is enough" moment when we decide that we can't be linked to these morons because their system is a failed system anyway? Any system that needs the buy-in of Slovakia and Malta can't be one we take seriously, can we?
I think we are at two crossroads. One is the forced irrelevance of Europe, simply because its system is such a joke that we have to accept that it will collapse and we have to start the insulation process, the worldwide cordon of this union. The other is that Germany and France are really all that matters, and that they are going to lose their credit ratings eventually, so let's move on.
The macro hedge funds, of course, won't let this happen. They are so big, they can knock the futures back to levels that cause more selling that reverberates and takes us down to all new levels. Think Flash Crash.
But what we have seen in these last few months is that if you stick with the stocks that have good dividends and if you are in the companies that are recession-resistant, you are going to be able to snap back and lose a little or break even until this moment clears.
I thought for a long time that such a statement couldn't be backed up. But Dexia changed everything. Dexia made it clear that Germany and France see the futility of dealing with their own creation. Believe me, Merkel and Sarkozy don't care nearly as much as we do about Slovakia at this point. They are going to do what is necessary to save their banks, regardless of these principalities.
So, are we wrong to focus on Slovakia? Only from the point of view that the grownups in the union know better, and as long as Slovakia can't cause a Lehman, then we are just fine, thank you. Which is why we aren't swinging today on the back and forth of this little country's gyrations and decisions.