Friday, September 23, 2011

Why only World War 3 will cure our ills

War © fintag

News comments:
When the going gets tough, it is time for war.

The great depression was cured when we all decided to go to war. Brutal but it worked and we all got to live through the post war boom (fridges, cars, iPhones, online dating, Excel, silicon breasts) up until 2008 when it stopped. The oil crisis of the 70s was bad and so was 1981 and 1987 along with a nasty recession 1990-91. We thought the world would end with LTCM, the odd Russian default but we just kept on soldering on and then hit the leverage problem.

Keeping rates low doesn't mean debt gets paid off any faster. The problem is rates have been too low for such a long time the debt / service ratio has just got too big. Governments are hitting their heads against a brick wall.

The smug Norwegians and Canadians can smile but they will be impacted too (although I wish I could be old in their countries and not mine) for they may soon have to ramp up their military because we want what they have got.

The way out is all out war. The recent discovery that Einstein was a fraud and light isn't that fast after all, it is clear the world order is going to change. The war will be between the haves (those with no debt) and those who dont (most of the non oily West). Mastercard versus Paypal. eBay versus Amazon.

All very grim and distracting. Which is what the news is all about.

The reality is markets are cheap, many companies are full of cash, inflation is pretty low, pent up demand is great and liquidity is ok. The volatility is all about the war between the USD and the EUR.

When Obama and TFG moan about the lack of action re Greece, they are really saying we want it to default asap and the EUR to collapse so we can back to being the Big Daddy.

So we are at war already. It will be over by tea time and order will be restored.

USD 1 EUR 0 (all sent off and gone into administration)

Today's shorts:
We will all be dead by teatime (telegraph)

G20 and Google plus to save the world (bloomberg)

Today's longs:
Please email your suggestions ...

The colour green to be banned for a few more weeks.