You knew the world would not be the same

I suppose one way or another we all knew what had to happen here.

Only a fool dismisses the potentially cataclysmic socio-economic protests outside Wall St as a non-event. Even so, perversely, it's a self-absorbed and deceitfully false consolation to chant demographically popular anti- Wall St rhetoric. To do so adds credence to the establishment which relies on the ignorance of the people for stability. Systemic failure is hard-wired into the financial 'operating system' and it can't be outrun..

Ignoring the emotive naivety that 'all men are created equal', the presupposed notion of self-indulgent material entitlement becomes core. Selective praise for technological advancement is equally naive. For interest, lauding Apple Inc. for its technological innovation whilst despising the technological efficiencies in the manufacturing sector which, by definition, lead to job losses is wrong. Equally, blaming banks or Wall St for excessive credit extension, sovereign or otherwise on the basis of deferred repayment, an accepted, modern innovation, is ignorant. These institutions, conduits for our ceaseless material demands, then become scapegoats for greed, not theirs, ours...

Accepting that the fault lies within each of us is an obvious if not painful prerequisite for economic change. Only then can we effectively address 'the system' which is, quite candidly, terminal.

Cry our disenfranchised youth..

Even if you consider yourself well-read, intelligent, sophisticated, proactive and or financially astute, chances are you haven't heard of the Occupy Wall Street movement. Described by the US establishment as a dysfunctional rag-tag group of disenfranchised youth intent on social rebellion and as a consequence dismissed by the media, these disenchanted few deserve our considered attention.

Occupy Wall Street is a self-styled descriptive label for the demonstrative Wall Street sit-in protests of ordinary men and women, mostly young, some old, who find themselves homeless, jobless and economically disenfranchised. Their plea, largely ignored by the financial media, is a thunderous silence which paradoxically proves their claim that Wall Street has an insurmountable stranglehold on US politics and commensurately on the media.

If I was you I would sit up and take notice. Understanding market structural reform and social imbalances will become key risk variables.

Corporate greed, epitomised by the colourful antics of Wall Street's captains of industry, will result in more social upheaval. People are losing hope. People are angry! Politicians, regulators and money-managers, variously shortsighted, would do well to pre-empt an inclusive strategy for the populace at large or history will record our social implosion.

Quack quack - Financial-media pours on the oil!

Influencing the human psyche in times of financial stress is fairly straightforward. It's not science or an acquired skill. Get the right people saying the right / wrong things and short-term markets react accordingly.

You might say that unique to the markets in recent months is the prevalence of unsubstantiated emotional opinion voiced publicly which, in some cases, has had draconian implications for targeted industries. By way of example, the narrowly averted french interbank lock-out arose, largely, from individuals /institutions with opportunistic intent and given access to visual-media. At face value, very few level-headed investors discount the brevity of the situation in Europe. Nevertheless, analysis free of bias and or emotion is uniquely the global commodity in least supply... Who will ever forget the slack-jawed, dazed confusion of Biggs, a respected big-star 'regular' on Bloomberg?

Now, more than ever, we are hostage to media-channeled emotive influence.

Bull-runnings...!

The markets are poised for another volatile week this week ahead of the EU and IMF reports on Greek-solvency and Thursday’s German vote on an EU stability fund. It’s a disheartening prospect for most. Even so, sifting through the financial jargon, speculative volatility and political impasse is possible if you ignore the emotive pull of FEAR. (Net equity outflows suggest that’s more easily said than done).

Faced with this political turned banking turned economic-growth turning political turned banking turned…. crisis it’s easy to understand why investors have lost confidence in the system. Without understating the brevity of the EU/global crisis most of the recent stock-market declines have been self-inflicted by investors susceptible to an emotive press. It’s usually costly as history will show.

As a reminder and working backwards: - Biggest weekly stock-market declines since Lehman and the financial crisis in 2008;  commodity prices collapse on adjusted forecast growth prospects; Bernanke predicts ‘significant’ risk to the downside; ECB commits to three-month funding for EU banks locked out of the interbank funding market; EU banks stock-prices collapse on exposure to Greece and other potential EU-member delinquents; Greece faces default; euro strength threatens EU-member nations unable to export; German growth exceeds expectations on exports to a captive duty-free eurozone market; EU banks encouraged/compelled to lend to member nations favourably; France and Germany push for a common economic union.

So what did we expect? Surely we should not be too surprised by the latest turn of events in Europe? The structural inequity in the 'common-union' was manifest at inception. One more thing whilst we're on the subject of economic imbalance; only an eternal optimist or a fool would suggest that China's phenomenal growth does not carry with it some interesting socio-economic issues still to manifest. Legislated economic subjugation ALWAYS has a shelf-life...

Nevertheless, emotively speaking, you might conclude that the latest stock-market crisis is a FEAR-contrived response to failing confidence in the system. Until we see evidence otherwise, liquidity-confusion will stay systemic.

Boehner's amazing technicolour dreamcoat

The amazingly arrogant letter penned by Boehner & his Fellows-of-the-IQ-deficient association (FIDA) and delivered to Chairman Bernanke interrupted, rudely, whilst in the chair at the FED's two-day monetary-policy meeting, demanded no further monetary-policy action...?? Anecdotally it's the blind who with a skip & a chuckle and grappling in the dark for the hand of the sighted attempts to lead the sighted safely through the global economic traffic-snarl...

Flying in the face of expectation, America's politicians continuously dredge the sludge of incompetence in bewildered drudgery without coming up for breath. Just how they do it so consistently well remains a modern Congressional - vocation understood by few, if any, non-political 2-legged hominids.

Drunk on the life-juices of ordinary American men and women these jesters of the political court continue to nuzzle the trough for more. The ghosts of leaders-past, grim-faced and humourless, stride the dung-speckled halls of Congress weighed low in chains of shame. America's obituary shall read 'We knews dem 2 be fools but we's failed 4 we's 2 foolish 2 be better'.

'Operation Twist' is QE3 by any other name

A divided US Federal Reserve gathers this week in a market-anticipated drive to realign monetary policy in the face of high unemployment and rising inflation. A third round of bond-buying or quantitative easing (QE) has its critics both from within the FED and from Congress. It has been claimed that QE2 was largely to blame for significantly higher commodity and food prices...Seemingly out of arrows the FED may consider the implementation of the failed 1960s plan colloquially dubbed 'Operation Twist' as a short-term boost for the US economy.

The idea is to use FED funds to lower longer-term interest rates by selling short-term government securities (or by letting them mature) and buying longer-term government bonds. 

The FED's increased demand for long-dated bonds would drive down the interest rate payable to find willing buyers. The falling long-term interest rate at the expense of higher shorter rates would alleviate the debt-burden of struggling home-owners and at a stretch also boost business spending.

That's all good and dandy but in case you've forgotten, this crisis is the result of policy indecision, poor judgement and political ineptitude.

Beware BRICS bearing gifts..

BNP Paribas
4, rue d'Antin
750002 Paris


Attention The Board of Directors

Dear Sirs / Madam

I'm a tax-paying son-of-a-BRIC and by now you will have read in your Les Echos our (the BRICS) collective intention to extend your access to additional credit facilities in what can only be described as a selfless act of mercy before you suffer the Coup de Grace.

Now, after some careful soul-searching and studied consideration, I too feel your plight sufficiently dire and in need of urgent redress. Therefore, I'm thrilled (avec plaisir), ecstatic even, to confirm, given your hitherto impeccable financial standing, that you have been selected & pre-qualify for an additional $1000 away-from-the-window funding. Now, I realise that this must come as quite a shock. Even so, I can imagine your relief. There are however and this is important, two caveats. Firstly, I will require appropriate security and as a start might I suggest the Arc-de-Triomphe de lEtoile? Perhaps, given your generosity in Athens, you would, contrary to what would be considered prudent business practice, volunteer additional security? I'll leave you to your deliberations; exhausitive, no doubt. Secondly, if you celebrate the generosity of my offer by going to the press, the deal is off. It is not my intention to move global markets on the news. Notwithstanding, it would, however, be disingenuous to hold your board accountable for a leak stemming from any unauthorised activity ie: board-room phone-tapping and or other clandestine eavesdropping irregularities, by the mainstream press.

Fondly, yours in rescue.



Son-of-a-BRIC

PS: I'm going out into the garden now to mine more gold. Demand, it seems, is quite robust.