Picks of the bunch

[John W Clark]

Dear all,

Firstly, I wish you all a happy, productive and prosperous 2012. Here's to hoping that things don't develop as I expect they will in many countries ;-)

OK, so I've finished my holidays and am getting back "on the horse" for a new year.

Below are a few choice picks from the research and info that has crossed my hard drives over the past few weeks:

• Sovereign Defaults in perspective (FT via MacroBusiness)

The chart therein provides a powerful insight into how many times larger this current sovereign debt crisis than any other previous sovereign crisis in modern history.

• President Obama has just radically usurped the US Bill of Rights (Mish)

The President has signed into law a bill that permits the indefinite detention, without charge or trial, of any US Citizen even on US soil. There are some brilliant links to powerful critiques of this new law in the above link.

• Europe's big challenge in 2012 - a huge wall of debt to roll over

This is undoubtedly one of Europe's biggest challenges this year (and the US and Japan face similar challenges, but in somewhat different environments). There have been many good pieces published on this subject, but here is one that summarises the key figures - MATURING E.U. BANK DEBT TO HIT A WALL IN 2012 (PragCap).

Without massive intervention of some kind, I'm quite confident this situation would bring the bond market (and with it, the banking system and many European governments) to it's knees. The ECB, amongst others, has been making quite large interventions already, but it will need to do a whole lot more to avoid the system having a systemic crisis. And, as my readers will know, there is "no free lunch" or magical intervention that doesn't come without major foreseen and unforeseen consequences. I speculate that the ECB will employ some form of mechanism to accept even more junky collateral from the banks in exchange for cash and probably extend maturities on loans as well. This will lead to the ECB having a balance sheet that makes the US Federal Reserve's massive balance sheet look good by comparison. If I'm correct, then we'll see the Euro currency continue to weaken (probably dramatically) against the US Dollar and other more stable currencies like the Singapore Dollar. Such moves, if they were to be made, are not guaranteed to succeed by any means and (as I've explained many times before) if they do not, then the implosion later on will be even bigger than if they hadn't intervened in the first place.

In short, the European leadership is doubling-down on a double-down on a double-down... attempting to artificially manipulate an escape route and multiplying the consequences should their manipulations ultimately fail.

What I can be quite certain about is that most (if not all) of the European region will, at best, experience very low to negative real growth. The euro currency (and the GBP) will continue to weaken as the authorities carry out their plans to steal from prudent savers by back-door default through planned currency devaluation.

Additionally, understand that the european banks and their respective governments have now completely intertwined their fates. If the banks go down, so will the sovereign governments that they are completely dependent on.

This is a high-stakes situation of unprecedented magnitude.

That's all for the moment. There is more stuff in my inbox to trawl through but I'm out of time today.

Finally I will leave you with this poem, which I found here, which I find quite beautiful and offering it's readers very valuable challenges and reflections as we stare down the barrel of 2012:

It doesn't interest me
what you do for a living.
I want to know
what you ache for
and if you dare to dream
of meeting your hearts longing.

It doesn't interest me
how old you are.
I want to know
if you will risk
looking like a fool
for love
for your dream
for the adventure of being alive.

It doesn't interest me
what planets are
squaring your moon...
I want to know
if you have touched
the centre of your own sorrow
if you have been opened
by life's betrayals
or have become shrivelled and closed
from fear of further pain.

I want to know
if you can sit with pain
mine or your own
without moving to hide it
or fade it
or fix it.

I want to know
if you can be with joy
mine or your own
if you can dance with wildness
and let the ecstasy fill you
to the tips of your fingers and toes
without cautioning us
to be careful
to be realistic
to remember the limitations
of being human.

It doesn't interest me
if the story you are telling me
is true.
I want to know if you can
disappoint another
to be true to yourself.
If you can bear
the accusation of betrayal
and not betray your own soul.
If you can be faithless
and therefore trustworthy.

I want to know if you can see Beauty
even when it is not pretty
every day.
And if you can source your own life
from its presence.

I want to know
if you can live with failure
yours and mine
and still stand at the edge of the lake
and shout to the silver of the full moon,
Yes.

It doesn't interest me
to know where you live
or how much money you have.
I want to know if you can get up
after the night of grief and despair
weary and bruised to the bone
and do what needs to be done
to feed the children.

It doesn't interest me
who you know
or how you came to be here.
I want to know if you will stand
in the centre of the fire
with me
and not shrink back.

It doesn't interest me
where or what or with whom
you have studied.
I want to know
what sustains you
from the inside
when all else falls away.

I want to know
if you can be alone
with yourself
and if you truly like
the company you keep
in the empty moments.
 - "The Invitation"- by Oriah Mountain Dreamer

Cheers

John