Sovereign Default -- What If Everything We Know Is Wrong?

Please pour a cup of coffee (fortifier optional) and take the time to read this piece from ZeroHedge via Jim Sinclair, who endorsed it with this declaration:

Dear Extended Family,

I sent an email to you awhile ago saying "This Is It," when it wasn’t apparent.

Now, I am sorry to say, THIS IS THE END because it is becoming apparent.

Everything stands on the foundation of CONFIDENCE which is cracking rapidly.

Respectfully,
Jim

The essay begins:

When psychologists evaluate human behavior, one of the most prevalent observations regarding any activity is the all too often flawed basis of perceived versus realistic outcomes that dictates our every action. As imperfect creatures, we tend to construct theories that conform with our worldview, which are subsequently reinforced by our confidence (or lack thereof) in the future. This is true in any discipline: finance, politics, gambling, mating, etc.

There is hardly a better example of this than the very basis of modern economic theory where assumptions about the validity of fiat currencies determine the actions of central banks, which in turn spill over into every aspect of modern society. Yet what if the very basis of core assumptions is wrong? What if every activity exhibited by humans in the post gold-standard world has a flawed assumption at its core?

Austrian economists have, of course, claimed this for ages, usually seeing their efforts conclude with a dead-end as the attempt to change the status quo hits the brick wall of quadrillions of (arguably worthless) pieces of paper which dictate the status quo. However, with the recent turn for the worse, courtesy of sovereign bail outs (as confused as they may be) could the day of reckoning be fast approaching? With each passing the day an affirmative answer seems closer at hand. Today, SocGen's Dylan Grice shares his perspectives on popular delusions, and why these may soon be coming to an abrupt end....

Read the rest, and pass it on.

Tempus fugit.