Scolders, socialists and grown-ups are all at play here, and it's what makes the Greek situation so confused, but also so non-Lehman in its style.
First, I have resented the dichotomy that the press has insisted on spewing this whole way: we either have a Lehman situation on hand, with its incredibly grave contagion, or we have a sanguine situation where there will be a deal. Both extremes got us into a particularly ugly day yesterday, accentuated by hedge fund losses in Puerto Rico which, alas, the Europeans had nothing to do with, and was as poorly timed as Bill Dudley's insistence that a rate hike is on the agenda in September.
There wasn't going to be a Lehman situation replete with a collapse in the euro and spreads widening in peripheral bonds, because Mario Draghi has told you that wasn't going to happen, and he's got great credibility around the globe. He is a brilliant central banker that only the hard money-ists -- who have been wrong the whole damned time -- condemn.
There's a considerable bloc of people, for example, who take that fool John Claude Trichet as a serious central banker, even though he raised rates twice going into a recession of great magnitude. Those people are hard money-ists, and they are ideological fools of the Herbert Hoover variety.
Fortunately, Draghi is not one of those. He figured out how to contain things to the stock market, which had to come off because Greece is bad for EPS both in Europe and here.
The other part of the false dichotomy is that this government in Greece is a legit one that was elected to compromise and not repudiate. The Greeks were sick of austerity and you can't blame them, because Greece is pretty much of a kleptocracy and there was a minority that has been in fabulous shape the whole way, while the lesser off have seen nothing good come from austerity. These were the "lose-lose" people, who felt they lose if they stay in the euro and compromise -- one and the same to them -- or leave the euro and play through the downturn and then come out stronger on the other side.
The latter group is in charge and it played its hand aggressively. But it timed things all wrong. It should have held the referendum a week ago, before the lifelines ran out. It was their first misstep. Second misstep -- they needed a currency in lieu of the euro in case the referendum said no to austerity. They seem not to be ready. Third misstep, they hadn't solidified the Russian-Chinese lifeline yet. Fourth misstep -- wrong limit on the ATM. Make it 60 euros ($66) not 40, and burn through the surplus that was avail. Fifth misstep, and most crucial, betting against Draghi, thinking that yesterday would have caused some contagion and panic.
But the panic was limited to stocks not bonds, because the bonds were almost all in public, not private hands. Of course there were hedge funds that owned both Europe and Puerto Rico on margin, which caused the last dip in stocks. They were Lehman maggots and now they are Greek maggots. They fulfill no purpose other than to be catalysts for the bad. Necessary evils of the rich.
Tsipras is too clever to make the referendum on his own government. The ballot will be to stay in the euro/austerity or go for freedom and eventual happiness. Again, though, critical misstep, happiness looks like yesterday, which had that Great Depression feel about it.
After being so clever, Tsipras really misjudged, so now he has to try to go to the table again. Given his now descent into blunder after blunder, this hand should be "you are suffering, my people, so I went back to the table, but the cruel German taskmasters were even more heartless."
I think he is buying time for a lifeline for anyone but Europe. And this is electioneering at its worst -- a show of how Germany in our time of need is simply unreasonable.
But our futures gobble it up, because we are perennially hopeful. Let's hope for scenario one, where all works out. But let's prep for the final scenario, where nothing works out except Draghi stems the tide and a quarter of our earnings are in jeopardy, hence the retreat on day two to the Kroger (KR)/Lowe's (LOW)/Radius (RDUS)/Alder (ALDR) domestic/biotech first leg of the bottom.
Remember, here housing and biotech should be the first to bottom in any scenario. However, it is a narrow bottom because all hopes of a deal have been false, so we would be lacking in requisite skepticism if we believed in the best scenario.