All Men are Liars
Some of you may remember the ’80s cop show Hill Street Blues in which the role call Sergeant Phil Esterhaus used to tell his officers at the end of their morning briefing “Let’s be careful out there.”
I know next to nothing about the financial world, but I imagine that the trading bosses at most of the big brokerage firms, hedge funds and investment banks are saying the same thing to their pot-bellied orcs employees as the Global Financial Cackfight deepens.
What I do know is when a website as conservative and venal as Forbes is publishing front page specials about the economic sky falling, some very rich people are getting worried about the way the dice are rolling …
What seems to be a common theme in many learned financial types’ judgments is “we know not what we do” because there are so many serious, intertwined global problems having unintended consequences on each other.
Forbes contributor and president of Asset Management Research Corp. Sy Harding says, “It seems like dozens of global economies that were on the brink of an abyss only a year ago, but are now pulled well back from the edge, are being held there by intertwined strands of hope, with each one that stretches too far or breaks giving the rest an unsettling lurch back toward the abyss.
“That intertwining of global risks is scary enough … but attempts to strengthen individual strands unilaterally without foreseeing the unintended consequences, compound the fears that the problems are too complex and intertwined for those in charge to even understand, let alone fix,” he writes.
German regulators tried to correct one problem but created another doozy on Wednesday night when they banned naked short selling of credit-default swaps, German Treasury bonds, and the stocks of major German financial firms.
That sent the euro into another downward spiral because, if traders and hedge funds couldn’t sell European stocks and bonds short, “the only method by which they can trade on negative expectations for Europe is to short its currency. And they did, with the new instability for the euro plunging stockmarkets world-wide,” Harding says.
I won’t even pretend to understand most of the stuff that is causing our financial markets grief.
What I do know is that if my neighbour was on the piss every night and working only two days a week, he went bankrupt and I was then told I had to pay off his debt, I’d be furious.
If my neighbour then started rioting outside his house because he had to cut down on his boozing to help pay off his debt, I’d be ready to impale him on my gleaming Germanic lance and grind his miserable skull into tzatziki.
This is essentially what Germany has had to do with the Greek economy, and if the pundits are to be believed, it’s going to happen again with the rest of the PIIGS economies (Portugal, Ireland, Italy and Spain) and god knows what happens then or if any one of those other “strands of hope” snap.
I’ve been saving for an apartment for some years now, but it seems craziness to swap a chunk of cash for debt in this market, especially when the only people encouraging us to buy homes are banks and real estate agents.
This is the equivalent of the conversation you have with a dude named Cisco at 3AM in a red-light district public toilet.
“You wanna get high?”
“Yeah man, it’s good stuff. Blow you head off.”
“You ever tried shootin’ it?”
I might just get a cab (to my rented) home, Cisco.
What also seems crazy is to put that money into a market that is lurching around like a fevered toddler not sure if it wants to scream, sleep, vomit, poop itself or breastfeed.
Many people “in the know” have now told me “cash is king” in this economy and to just hold onto my dosh and see what shakes out – but that also feels like waiting to be king hit.
I’m wondering what the “little people” – that’s you and me – are doing to safeguard yourselves and whether you are taking any considered risks to capitalise on this situation?
Should you put your savings into a term deposit, have you got into gold, or do you simply have hard cash under the bed?
Do you think the property market is due to crash, are you worried about your mortgage, or do you think the big brains will work it all out and you’ll be selling your one-bedder for $1.5m in five years time?
Obviously our economy is different from that of Europe, in that billions of dollars are always going into our markets because of compulsory super contributions.
We also have a distinct shortage of new homes being built and a steady immigrant population to house, which is keeping property prices buoyant.
However, I read somewhere recently that, until World War II, World War I was known as “The Great War” or the “War to End All Wars” and this adjustment in thinking may be what happens with the disaster currently known as the “Great Depression“.
Let’s hope we’re not the crackheads who have to go through the Great Depression II.
Then Cisco will be selling us potatoes and pantyhose, instead of meth.
If you’ve ever wondered how the astronauts do doodies in space, this NASA production is the video for you. I particularly like the “alignment camera”.