Ireland Auditions for the World's Wildest Reality Show

When we last watched As The World Turns,  we were left with a cliffhanger of a question, Will Stateside Markets Avoid a Greek Tragedy?

Minyans should be familiar with the storyline; yesterday Greek economic prospects -- which have massive implications for European banks and by extension, US institutions -- darkened as European leaders couldn't reconcile their dilemma. How can one adjust debt maturities without triggering the textbook definition of "default"? The Greek people, violently demonstrating in the streets, cast their vote the old fashioned way.

This morning, we received word of a new plot twist as the Irish Finance Minister, Michael "My sister ain't Peggy" Noonan said that senior bondholders should share in the losses of Anglo Irish Bank Corp and Irish Nationwide Building Society, effectively reversing their policy of protecting owners of senior securities. The ECB, as we know, is on the other side of that trade; they insist that fixed-income haircuts aren't part of their master plan.

Welcome to the Age of Austerity, sovereign style. This political infighting overlaps with what Professor Peter Atwater and I have been scribing for years. In fact, when I read this Bloomberg article yesterday, I thought I was reading content from Minyanville circa 2008-2010. I'm not saying there was particular utility in being that early, but it reinforces the notion that we offer the financial news you need to know before you know you need it.

Be that as it may, there is a huge difference between saying something and living something, which is a concept that MV EIC Kevin Depew and I muse on quite often. Take a look at the progression of these articles, for instance.

• The Great Deflation and Stealth Depression, September 2006.
• The Modern Stealth Depression, July 2008
• The Modern Stealth Depression Revisited, June 2010

I can tell you from first-hand experience that when we were ahead of the curve -- such as offering in 2006 that we were about to enter a "prolonged period of socioeconomic malaise entirely more depressing than a recession" -- we didn't make many friends and in fact, we lost some advertisers. The truth sometimes hurts, however, and I share this tangent as we focus anew on the modern-day dilemma.

There are a few things I have clarity on, one of which is that the enormity of our economic condition must reconcile itself in time. What's less clear, but perhaps more important, is the timing. Corporate credit markets suggest higher equity prices before a more profound comeuppance, yet the imbalances are cumulative still and the risk has migrated from the financial to economic to social sphere, as evidenced by what we're witnessing around the world.

Nobody, and I mean nobody, comes into our house and pushes us around can tell you with certainty what will happen and when.  That's why I employ a stair-step approach to our financial journey, and while it's difficult to ascertain whether our S&P 1250 near-term target has been more or less met, the benefit of the doubt remains with the bears until one -- or at least any -- of our primary tells turn.

Watch the dollar Minyans, as I'm hard pressed to see a sustained lift in the greenback and asset classes.

Good luck today.

R.P.

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