Past is Present

"Everyone is drinking the same Kool Aid."
--Gordon Gekko (Wall Street II)

This has to be today's headline of the obvious. Greece's probs could result in contagion? Really?

Peter Atwater writes this morning that it seems more like 2008 each day. The risk from 2008 has not gone away. In fact, it is bigger. And it has largely been transformed from private to public hands.

Risk has been socialized.

This is why we're now seeing stress at the country level. By socializing risk, we bought some time. But socialized risk has no place to turn for relief when the bills come due. And they are starting to come due.

There are two basic choices. Dial back on standard of living and start living within (or below) one's means while paying off debt. Or default--either thru refusing to pay debt, or in the case of countries that own a printing press, by paying off debts thru freshly printed paper.

I've watched Wall Street II a few times over the past couple of months. The movie does a nice job of capturing how it felt when credit markets were melting down in '08. I want to remember what it feels like so that my brain doesn't freeze should things start coming apart again.

position in SPX