Photo: Wikimedia Commons
So, Greece continues to move closer and closer to the brink.At this point, the consensus seems to be that Greece will exit the eurozone.
However, Art Cashin thinks that the Greek’s desire to leave comes with little understanding of what exiting would actually entail.
Cashin, UBS Financial Services’ director of floor operations, was reminded of how P.T. Barnum used to run his museum.
From today’s Cashin’s Comments:
This Way To The Egress – One of the more famous stories about the showman, P.T. Barnum, concerned a ploy he used at his American Museum.
The museum was hugely popular back in the 1800’s. The trouble was that it was so popular that visitors would revisit exhibits over and over again. Some would spend nearly the whole day there.
That frustrated Barnum on two levels. The dawdlers had paid only one fee so Barnum wasn’t making any more money, regardless of how long they stayed. Second, and more importantly, the dawdlers kept the museum so crowded, that new clients (and their new money) could not get in.
Barnum’s solution was to set up a series of signs reading “This way to the Egress”. Most clients were poor immigrants with limited vocabularies. Not knowing that egress was a fancy word for “exit”, they followed the trail thinking it was some exotic animal.
When they followed the signs and pushed through the door marked Egress, they found themselves outside and a locked “Egress” door behind them. If they wanted to see more, they would have to pay another fee and they had made from for new clients.
Cashin noted that the traders’ take on Greece’s desire to head to the exits were a lot like the Barnum’s clients heading toward the egress. “Frustrated with austerity, they might find themselves suddenly locked out of the Euro and the Eurozone.”
However, Cashin also reminded us that a Greek exit would not be easy.
But, as noted earlier, Greece cannot exit cleanly. The contagion risk is evident. There are reports of plans to control currency flows. Banks would be closed for a week while drachmas are printed and distributed to replace current Euro deposits. There are discussions of how to deploy the police to protect the shuttered banks. ATMs would be restricted to allow de minimis daily distributions (20 Euros?) to meet daily needs. Transfers outside the border would be forbidden.
Like Barnum’s clients, the Greeks don’t want to leave the building, but an accidental slip on the wrong path could find them suddenly outside with the door locked behind them. Beware of the Egress.