Who cares about what happens in Cyprus? The Russians for one -- seems a lot of the oligarchy decided to stash their cash in Cypriot banks. It must be some sort of traditional Russian thing, because Cyprus has never been a particularly stable country that I can recall.
The Market Ticker has a whole series of posts about the crisis in Cyprus that are worth reading. Denninger seems think it is a very big deal and the lead-in to the ultimate crash.
The reason the "big one" has not hit is not because arithmetic is wrong.
One of our most beloved and storied neighbors was a mild-mannered, good-humored man who was handy in a Red Green sort of way. This was before duct tape became widely used, so Omar made do with whatever was at hand. He cut some firewood and loaded his old truck -- a two-wheel drive made of various parts and pieces of other trucks. The ground was frozen when Omar started out that morning, but by late afternoon, things had begun to thaw. Up on the ridge where he was cutting, it didn't matter, but as he crossed a bottom field with his overloaded rig, he hit a soft spot and sank to the axle. Omar got out of the truck with his jack, pulled a chunk of wood off the load, place it on the ground, placed the jack on top of it and started cranking. Of course, the chunk sank and the truck stayed right where it was. Omar sighed, sat down cross-legged, reversed the jack, pulled another stick off the truck, placed it on top of the sunken one, replaced the jack and started cranking. Over and over the process was repeated.
Now it is true that Omar did get his truck out because his stack of chunks eventually reached bedrock or at least something solid. He pulled some more wood off to throw under the sunken wheel. The combination of traction, support, and a noticeably lighter load resulted in success, at the cost of a great deal of time and energy, as well as wood that would have to be cut again. Fortunately, the hills around here were and are fairly good at growing oak and ash and hickory.
As far as time, Omar was a time sheik. He could spend time like it was going out of style -- not that he lived so long as much as he lived so well. No one ever had to cut him any slack; he possessed in overflowing abundance. His extravagances in this regard were most admirable. I only wish I had the same riches.
Anyway, our global financial situation is much the same as Omar's stuck wood truck. Japan has been jacking and stacking for the better part of two decades. The Japanese had a very big load to start with, but it is starting to look a little lean while their pit seems bottomless. Europe all piled into one truck, loaded mainly with wood from Germany and the Nordic members. The truck is already empty but the Germans are ferrying wood down by wheelbarrow to throw in the hole. China has a big pile of European and especially American wood, but a lot of it is hollow, and some of it is too badly decayed to do much good. The Chinese, along with the Russians, the Brazilians and the Indians, are still up on the hillside eying the fools stuck in the bottom and wondering how they are going to get home with the road blocked up.
The U.S. had the biggest truck and the biggest load. Every so often the Chinese drive down and toss us a few more sticks. We haven't cut wood in quite some time, and our truck is empty. The Federal Reserve is stuffing paper down the hole, but it doesn't seem to be giving us much lift. We are also shifting and swapping sticks of the Chinese wood with the Bank of Japan and the European Central Bank when no one is looking so we can continue the fiction that we still have something to keep us warm in the long, long financial winter just ahead. The bad news is that the woodlot is looking a little thin and the chainsaws are running out of gas.
Ah, I see you are a follower of the Omarian School.
ReplyDeleteIn the long run, we run out of wood
I tell ya, if I could get this mortgage paid off I'd go full Omar.
My wife just saw the Cyprus report on the news. She was really excited. I imagine we'll have a couple of empty accounts by the end of the week.
ReplyDeleteOmar was a pretty cool old guy. He'd built a rock house -- rocks being the only thing more plentiful than brush and briars around there. He never worried about anything, never got excited, and made it about as well as everybody else.
My nephew is going that way. He's selling off his dairy cows and going to raise beef and rebuild trucks and tractors with a couple of his buddies. He'll just that much further under the radar.