Thursday, June 17, 2010

Now, I'm lost at high finance...

...but I feel slightly better knowing that I'm not the only one wondering for how much longer the German ant is willing to play ATM machine for the Mediterranean grasshopper. Lord knows the situation hasn't done the Euro any good, and you have to wonder if the Jerries are willing to lash themselves to the mast as a show of solidarity.


Hypnagogue said...

I don't think the German pawn shop is planning on Greece buying their coat back.

Desertrat said...

Bottom line? Hayek 1, Keynes 0.

A little research on how the Spanish system functions (or doesn't function) illustrates why there is no hope. Sort of a tossup when comparing with the US.

It looks to me like the monetary policies of the developed nations seek to recreate 1923 Weimar.

Got gold? (Le in-joke du jour.)


Boat Guy said...

As another economist of the Austrian School (c.f. Hayek above) noted "The first Euro nation to panic may actually save something"
Gold? Silver? Ammo?

theirritablearchitect said...

Desertrat wins this thread!

Anonymous said...

Does it matter?

Germans are followers, almost by genetic design. They may display some anger, stomp their feet a bit, maybe vote out a scoundrel or two, but that will be it.

I lived in Germany for 4 years. More than any other people in Europe, the Germans are enamored of supra-national institutions like the EU and the UN. Faced between working like dogs for the Greek rat-hole and losing forever the "vision of Europe", the Germans will react like good little peasants: they will obey.

Bram said...

VDH wrote a series of article wondering the same thing. We'll see how long Gerry wants to work for 50-year-old Greek government retirees.

Of course I'm wondering the same thing about New Jersey / American taxpayers.

staghounds said...

Actually it's Keynes about six, Hayek hundreds. A very few times, governments have, under favourable condtions, pulled back from, and even reversed, inflation.

The U. S. after the Civil War, for example. Britain afte 1815.

The favorable conditions in both cases a tough, oligarchal government that found itself sitting og a Saturn V or productivity and natural resources.

The non-inflationary theory of the euro was that with everyone watching the printing press, no one could put it into overdrive.

Problem was, they gave everybody a checkbook on the joint account.

Stuart the Viking said...

It's the waiting that is the hard part. If the world economy is going to crash us all back to the stone age I wish it would just go ahead and get it over with so that we can start rebuilding. Instead, this is going to drag out indefinately.

What's the chance that some genious is going to come along with an idea of how to really fix the economy? If he does, what's the chance anyone is going to listen to him?

I rest my case... agree or don't agree... no skin of my ass.


Borepatch said...

It's astonishing to see the bien pensants trying to prop up the Euro. Certainly the Powers That Be can paper over the cracks in the short term, but you have a fundamental divergence of forces in this dynamic. It will be less expensive and less painful to let it go sooner rather than later.

But go it will. And the later and more painful it is, the stronger will be the reaction. The reaction may be strong enough that the Deutsche Volk decides that some panzer divisions are just the ticket to solve the "Greek Problem" once and for all.

Extreme, yes. But the level of frustration in Germany is running very high after two decades of paying for reintegration of the DDR. Now they're being asked to pay for the Greeks, and the Spanish and Italians are lining up behind.

There's a country soung about this, and the lyrics contain the words "This caint be good" ...

Desertrat said...

Tam, I'm sure you've seen flocks of cowbirds or NatGeo film of schools of small fish: How they suddenly change direction while in motion?

Today's markets, whether stocks, currencies or gold/silver, are reacting in the same way to the "rumor du jour".

A lot of it is risk avoidance, and that's a function of the latest rumor. Sorta scary, to think of billions of dollars chousing around the world, just from the latest hot-tip rumor.

Hey, it's not just the Obaminators who don't really know what to do next, what's gonna happen next.


Ed Foster said...

And how did evil Soros make his billions?

He sold the Pound Sterling short when it was "under pressure", i.e., wildly overvalued and holding on only because the central banks were supporting it through buying it at traditional rates and by gerrymandered deals to keep the suckers looking the other way.

Get a group of investors to borrow a total of perhaps 30 billion pounds. Each works through several banks so it doesn't look like a dump in the making.

Then the leader of the coin cartel announces that he has borrowed the thirty billion and has put it into Australian dollars, Swiss Francs, and gold, because the pound is approaching ass-wipe status as a real currency. The panic starts.

Said currency drops wildly in value, at which point the borrowers repay the loan with devalued currency and pocket the difference.

The cute thing is that panic selling drove the pound below it's real value for several weeks, and Soros used his gains to purchase British property with a good upside for a dramatic discount.

When the smoke cleared, he had about doubled the killing he made by selling short in the first place.

As much as I despise virtually everything else about the sociopathic ass-hat, what he did in the financial market was neither illegal or immoral.

The fault lay with the British government throwing good money after bad while trying to maintain an economic fairytale. Soros was only playing thief at the fire, garnering money that would have disappeared.

A simple biologic function, maggots eating up the diseased flesh to prevent gangrene.

Borepatch said...

"The nightmare for Germans is that an unholy alliance of Spanish, Greeks, Italians and Portuguese will be able to tell the good people of Bavaria exactly how much of their taxes they can spend in Bavaria and how much they must transfer to their needy cousins down south. Instead of a union in which the disciplined Germans call the tune, the system entrenches the bailout culture Berlin has insisted could never be a part of the single currency."

I'm guessing that this will make a lot of people in Dusseldorf angry.

Ed Foster said...

European definition of heaven:
The cooks are French
The mechanics are German
The police are English
The concierge is Italian
And everything is organized by the Swiss.

European definition of hell:
The cooks are English
The mechanics are French
The police are German
And everything is organized by the Italians.

Bubblehead Les. said...

Well, thanks to the miracle of modern technology, since I'm a night owl, I get to watch the the Financial Fish make their sudden turns in real life. Desertrat is right. Amazing what you can see on Bloomberg and CNBCWorld in real time! BHO shakes down BP, the Chinese sell off energy stocks, the Indians buy gold and dump Euros, the EU runs to the IMF for help, BHO props up the IMF, and the merry-go-round just keeps spinning. Kinda like watching a tornado come up your know you should head to the basement, but you can't leave the yard. My investment strategy? "Beans,Bullets and Bandaids".