It is Obvious

Chris Rick has got altogether too much to say

The Emperor’s old clothes

Posted by chrisrick13 on January 17, 2011

It is obvious: here there be…

I just read an article by Ambrose Evans-Pritchard.  Another of the mult-talented people that I seem to keep bumping in to.  He was on a similar theme to Notayesmans about the Portugese debt and statements by the people in charge.  They seem to be modelling themselves on the actions taken by the Irish so as to maximise their pain.

He also mentioned the EU mechansims in place to support ailing economies and talked of them being able to cope only with the ice above the water.  This I have heard before: Notayesmans, Flanders and Preston to name but three.  Everybody knows that the EU/ECB/IMF can keep Greece, Portugal and Ireland going, but that there is no possibility of doing that for Spain and/or Italy.  Yet still those who can stand on podiums before others and the press continue with the fiction that they can manage the situation.

We all know that Spain and Italy are likely to move to the state that they need serious help and that nothing can be done to save them.  Indeed there are many who say that Greece, Ireland and Portugal will fail and it is only a matter of time until they do.  All the kings horses and all the kings men are only mopping up yolk.

The euphemism I hear is that the markets will test…whatever action is taken.  It is such a good excuse for those in charge.  They are doing the best they can for everyone and suddenly an evil monster rears up out of the undergrowth and chases them off.  It is not their fault they are above reproach…and stupid.

What is a market?  It is a lot of people acting to get the best result for themselves that they possibly can.  If they don’t they lose.  It might be their job, their home, their life.  It is survival of the competent.  The fittest always survive but so do those that act in reasonable fashion.  For investing it is always a balance of reward against risk.  If the EU takes away risk then expect people to invest as much as they can at the insured rate.  If the EU says that it will insure risk and the market monster does not believe it can do it then the cost of the market’s investment goes up.  (We are all very interested in this as most of our pensions come from ‘the market’.)

The cost of the debt of the nations mentioned above is steadily going up.  It is only a matter of time until someone shouts: “Naked”.

It is obvious: here there be…Markets – grrrrrh.

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