Smart bet: All plans in Europe will fail. The euro will collapse. Greece goes bust. All efforts fail. The road where the can is being kicked is now a cul-de-sac. A dead end.
The problem is that the euro is not cooperating with that theory, gold is not cooperating, and the stocks, such as Banco Santander and Societe Generale aren’t cooperating.
The smart bet: Short all of those. You are just watching a big show that will be a flop.
I want to be that glib. I want to talk "black swan" and just go with the financial cataclysm systemic risk story.
But I keep coming back to that Geithner interview. Remember, there are three parts to his rap: 1.) The Europeans are way behind us in doing the right thing, a la TARP and stress tests, 2.) They are getting some religion, or they wouldn’t be calling him in for help and wouldn’t be offering this kind of lifeline they just did to the banks, and 3.) They learned from Lehman. You don’t let financial institutions go bankrupt. You either quasi-nationalize or merge. Anything but letting them go belly-up. They may have to do a Citigroup or a Washington Mutual, and while Greece may not make it, the muddle-through will work. In Europe they are way too big to fail!
That latter thought is all that people think about right now, and that’s behind this big move. Again, I reiterate, I know I believed earlier in the week that you could short and short, and I believe there will come a level where you can. But people, including me, got too negative, and the policymakers seem to have been woken up by the bank funding problems and so the scenario is better, the systemic risk is lower, and stock prices go higher.
Even if the smart money says they shouldn’t be.
The problem is that the euro is not cooperating with that theory, gold is not cooperating, and the stocks, such as Banco Santander and Societe Generale aren’t cooperating.
The smart bet: Short all of those. You are just watching a big show that will be a flop.
I want to be that glib. I want to talk "black swan" and just go with the financial cataclysm systemic risk story.
But I keep coming back to that Geithner interview. Remember, there are three parts to his rap: 1.) The Europeans are way behind us in doing the right thing, a la TARP and stress tests, 2.) They are getting some religion, or they wouldn’t be calling him in for help and wouldn’t be offering this kind of lifeline they just did to the banks, and 3.) They learned from Lehman. You don’t let financial institutions go bankrupt. You either quasi-nationalize or merge. Anything but letting them go belly-up. They may have to do a Citigroup or a Washington Mutual, and while Greece may not make it, the muddle-through will work. In Europe they are way too big to fail!
That latter thought is all that people think about right now, and that’s behind this big move. Again, I reiterate, I know I believed earlier in the week that you could short and short, and I believe there will come a level where you can. But people, including me, got too negative, and the policymakers seem to have been woken up by the bank funding problems and so the scenario is better, the systemic risk is lower, and stock prices go higher.
Even if the smart money says they shouldn’t be.
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