Into the Mystic

We were born before the wind

Also younger than the sun

Ere the bonnie boat was won

As we sailed into the mystic

Hark, now hear the sailors cry

Smell the sea and feel the sky

Let your soul and spirit fly- into the mystic Van Morrison Into the Mystic-Moondance

Much of the volatility, trepidation and chaos this year was perpetrated in the name of stability. The last few months have seen markets move reluctantly toward a harsher systemic reality. The problem with Central Bank monetary pornography is much of it is directed at masking that reality. Yesterday, Gerald O'Driscoll, a former regional Fed staffer, challenged publicly the legality of CB swap lines. Factually accurate, the comments got me thinking about risks in 2012.

Bank runs, liquidity droughts and collateral transactions (over unsecuritized/uncollateralized) are all symptoms of confidence crisis. Ours is not just a "faith based' financial system it's a "Blind Faith" based system. As the 70's power trio album cover attempted to show, the plane flies but few understand the mechanics behind it...its taken for granted. And so it goes in finance. Many may be encouraged by the destruction of financial alchemy but little is offered as replacement. 2011 has shown that year end marks are irrelevant when not put in the context of the journey to get there. In 2012, we move on into the mystic. The foggy uncharted void that comes when faith based structures die.

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