Gray Swans on the horizon?

[PP67]

Which do you think is more likely/imminent and what short term/long term impact do you think either would have on the PP:

1. Israel bombs Iraq's nuclear facilities...

2. Greece officially defaults...

I personally think both are an eventuality and also think either would be a significant test of the PP's philosophy as well as the PPers fortitude ...

Any thoughts?

[Ad Orientem]

War with Iran is much more high risk than most in government want to admit.  And it is by no means certain.  Greece on the other hand is broke.  That's a mathematical fact.  There is no way they can pay back what they owe.

[MediumTex]

Greece will definitely default.

With Iran, OTOH, it almost seems like all of the bluster makes it more likely that a conventional attack may never actually occur.  We may just keep going down this road of periodic assassinations of Iranian scientists, cyber warfare against Iran's IT infrastructure and various economic sanctions.

[smurff]

We've been at "war" with Iran since the late 1970s. It's largely a cold war of mutual threats (punctuated with sanctions on the usa side) that goes through hot phases involving assassinations, hostage takings, worldwide terrorism, Persian Gulf skirmishes between aircraft carriers and fighter jets, etc.

Meanwhile Iranians arrive in the USA every day to visit relatives. They stay for a few weeks, then go home, with plans to do it again next year.

[alvinroast]

Which do you think is more likely/imminent and what short term/long term impact do you think either would have on the PP:

1. Israel bombs Iraq's nuclear facilities...

2. Greece officially defaults...

I personally think both are an eventuality and also think either would be a significant test of the PP's philosophy as well as the PPers fortitude ...

Any thoughts?

I didn't know they finally found Iraq's nukes.

I really hope you guys are right in that it's just a continuation of the cold war (like Cuba), but I'm much more negative about this right now. With the drop in oil demand this would actually be about the best time for a war with Iran. With the Greeks being a significant customer and their being broke Iran was already going to lose some business. This story in particular has me worried:
http://www.reuters.com/article/2012/02/ ... 1020120217

Anyway, I really hope I'm wrong about Iran. As for Greece, isn't it about the same population as Ohio with a much smaller economy? While it seems like the media is blowing this all out of proportion, there is a definite gray swan there. Who's on the hook for the CDS? Is my VP going to get hit hard when Vanguard's MMF gets left holding the bag for Greece?  There are just so many unknowns with the deriviatives that basically insure there will be huge black swan events in the future IMHO. Everyone thinks they're the smartest guys in the room now and everyone can't be.

[smurff]

That's why when Greece finally defaults, they will go out of their way to keep from calling it that, and will officially define whatever they call it as "not a default."  They might even make it a rolling event, not an instantaneous one.

Calling it a "default" triggers the CDSs, which are worth many billions of Euros for Greece alone, and being forced to pay up on a Greek default would trigger the collapse of banks and insurance companies around the world.  Even worse when a Greek default is followed by an Italian default, then a Spanish default... Trillions of Euros then. Which is the real reason for all the trepidation in Euroland:  They (TPTB) could care less about Greece or the Greek people--it's all those derivatives that matter more.

[murphy_p_t]

PP67...great question...I think having the PP will help us to sail thru...largely unscathed...even make the normal returns for PP...I'm optmistic because if something goes way down, I expect another component to carry the load..just as it was designed!

If stocks tank...the Bernank will likely ramp up QExx

[craigr]

Greece officially defaults...

http://www.presseurop.eu/en/content/art ... -ca-change

The Euro was always a bad idea. Spain has more defaults than any other country if I recall. Something like an average of once every 40 years.

I explain the Euro to people like this:

1) Take all your money, all your immediate relative’s money and all your extended family’s money.

2) Put it into a single bank account and issue everyone a checkbook. Also co-sign on all their current and future debts.

3) How long do you think it will take before someone starts taking advantage of the situation?

[pershing83]

The WSJ notes this morning there have been 5 mos in the last 5 yrs that bonds, oil, gold and stocks have all risen. Obviously Jan one of them. Just thought it interesting to post.