According to conventional rhetoric, nations such as Greece, Portugal, and Ireland and their terrible sovereign debt problems are out there on the periphery. In troubling times, such concepts of distance in interest rate, currency, equity, and commodity marketplace discussions occasionally offer comfort to nervous observers. What’s relatively or supposedly unimportant nevertheless can become quite significant to a so-called or apparent center of things and allegedly core worldviews regarding it. This sometimes can happen rather fast.
Greece’s debt drama on the European periphery (and similar plays on other frontiers) highlights the acrobatic wordplay of marketplace performers. Debtors and creditors, as well as regulators and lawyers and even politicians, know the magic word “default” has ominous consequences. You can call a fiscal or other debt situation a disaster. Fine, you can label the mournful scene or event a debacle. You can swear it’s dismal, depressing, disheartening, and deplorable. But no matter what, try not to call it (and the related fix involving it) a “default”! Words such as “rollover”, “reprofiling”, and “restructuring” are satisfactory, as long as they do not cause the dreadful term “default” to spring permanently into the dialogue.
In marketplaces as elsewhere, raising the issue of the periphery suggests the merit of addressing what we take for granted and why. What is peripheral or marginal can become central (and vice versa), and so our faith in something or someone likewise can change or diminish. Or, our doubts can evolve or transform into belief. Let’s take a quick look at China and raise a couple of questions. After all, faith in the China growth story and its future near-inevitability remains widespread and deep.
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On the Periphery (The Money Jungle, Part Four)