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VIDEOPrepare to Dodge Risks From Greece, Iran
Next week looks like it could be exciting.
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Nassim Nicholas Taleb wrote a book called The Black Swan to explain the existence and occurrence of high-impact, hard-to-predict, and rare events that are beyond normal expectations. My book review can be summed up in two words: Manure happens. I'm not just referring to dairy barns.
This was one of those boring Winter weekends -- no football, and too early for important college basketball games. I was reduced to scanning the blog world. I came up with two potential Black Swans, just enough to ruin any happy thoughts you have for February.
First, Greece is under pressure to reduce their deficit to 3% of GDP by 2012 from 12.7% in 2009 to comply with the European Union (EU) mandate. The Greek government plans to solve that problem by raising taxes and slashing wages for government employees, which have reacted to support the economy by declaring a general strike on February 10, more or less on general principles. Who blinks first here? The EU, the Greek government, or the Greek unions? My bet is none of the above. It will be the financial markets. However, this is slow motion compare to the next potential Black Swan.
There is an Israeli-based website called Debka.com that claims that Iranian Basijj militia chiefs are planning to seize the British embassy in Tehran. Oh, and by the way, the British sent the wives and children back home last June. If there was ever a "been there, done that" moment, this is it. Do the British have the guts to do anything? "Anything" translates into a huge oil spike (USO), and probably a spike in the dollar (DXY or UUP) which isn't the normal reaction when oil strengthens.
Although this seems like a long shot, this morning CNN had this: "Meanwhile, state-run Press TV quoted Iranian President Mahmoud Ahmadinejad on Sunday as saying that the nation will deliver a harsh blow to 'global arrogance' on February 11." February 11 is the anniversary of the 1979 revolution.
A harsh blow to "global arrogance." What is that? Admitting a nuke program seems a little counterproductive, but taking over some embassies could well be it. The middle of next week looks like it could be exciting. Minyanville tries to keep you ahead or at least aware of the potential risks. In the mean time, get ready to duck.
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