It's easier to build empires than to run them. A successful military campaign is enough to conquer them, to keep them over time you need the soft power of consensus and administration and the hard power of force, which must be perceived as permanent and superior. Halfway between the ordinary administration (which tends over time to decentralize even in the most cohesive empires) and direct military intervention (when it is necessary to restore power over a rebel province) are institutes such as inspection, coaching and the commissariat, through which the imperial power seeks to consolidate its influence and its prerogatives.
For this purpose, Trajan institutes the figure of the corrector, the extraordinary commissioner of imperial appointment who goes to correct the distortions that have occurred at the provincial level. Charlemagne creates a network of missi dominici who, when necessary, go in pairs (a nobleman and an ecclesiastic) to control the periphery. The missi are very powerful and in their hands, Lothair will later establish, the pope of Rome must also swear allegiance to the emperor. Hitting a missus carries the death penalty. Barbarossa renamed them ministeriales and chose them as poor and originating from regions far from those inspected to avoid any class collusion or solidarity with the local nobility.
Today's imperial messengers are called troikas. They flank, supervise and guide local power in fiscally rebellious provinces such as Greece. If Tsipras wins the elections, he will not expel the imperial messengers, but if he only partially implements his program, he will risk provoking his departure. At that point, theoretically, there could be a crisis of confidence such as to induce many Greeks, mindful of what happened in Cyprus in 2013, to withdraw their funds from the banks. From then on, the crisis could spread in ways that are difficult to predict. Under these conditions, European quantitative easing on sovereign bonds (which would also include those of the rebel province) will be very difficult.
Welcome to 2015, one month early. The satisfied, satiated and decerebrated atmosphere typical of normal year-ends (the last to be thoughtful was that of 2008) gives way to the sudden awakening of anxiety for the coming year, which usually occurs towards the end of January. The weighty annual analyzes that the big houses dedicate at the end of November to the following year are still fresh off the press. They exude optimism, serenity and confidence. They talk about good American growth, smiling central banks, European Qe and the latest welcome surprise, oil at half price.
All right, for heaven's sake, but the distribution of risks has decidedly overweight tails that sooner or later, at least, will frighten us. Greece, we said, is the first. Fortunately, it will take an astonishing series of negative circumstances and mistakes for everything to fall apart. Samaras must have been wrong in counting on the majority of 180 votes that the Greek president will have to elect on December 29th. Any political elections that will soon follow will have to give victory to Tsipras. Voters will have to make their austerity fatigue prevail over their fear of having their checking accounts turned into shares in a failed bank.
Tsipras, if elected, will have to avoid looking for a coalition partner to give him an alibi to renege on electoral promises. He will therefore have to govern alone, raise the salaries of state workers and hire a few thousand. The troika will have to take offense immediately and leave in a frown without even trying to limit the damage. Tsipras will have to boldly announce a default that would be of no use to him, since the Greek debt, almost all with the European Union, has a very low rate and a very distant maturity.
Italy and France will have to side with Tsipras and accept an attack on their public bonds and their banks in order to finally be able to have a good fight with Germany. In short, everything will have to go wrong. An improbable hypothesis, but such as to ruin the days of the 30th and 31st for the managers who will be skiing and who will have to monitor the sharp rise or sharp fall of the markets from afar just when the year-end quota is made. The other fat tail is oil. The famous aphorism of Mae West, a pop diva of her day, that "too much of a good thing is splendid" is questioned by the markets and worries them.
Discounted oil is good, half-priced oil bothers them. When that happened in the past, Mexico, Venezuela, Russia, and a host of Texas banks, among others, defaulted. Unlike the European crisis, destined to continue in ever new forms because the member countries tolerate each other less and less and find it more politically fruitful to criticize each other than to agree, the oil crisis is not structurally worrying. Of course, bad times are ahead for manufacturers, but the system effect is undoubtedly positive.
Tactically we remain positive on equities but we advise against placing high bets on the eve of events with a binary outcome such as the Greek vote or the Qe of 22 January. We remain positive on the dollar. As for oil, the first bold reactions of many state and private producers (we will remain profitable even at 60 or 50 dollars) suggest that the real pain threshold, the one that causes new projects to be canceled or even marginal businesses to close, has not yet been reached and is therefore further down. In short, someone will have to withdraw from the game before the price stabilizes and then rises again. That's why it doesn't warm our hearts that industry stocks are discounting crude oil prices and book value.
