Friday, September 23, 2011
It would appear that the knife has stopped falling. Whether or not it has been successfully grasped by the Kevlar gloves of the Asian central banks or whether this is just a moment Matrix style slo' mo' is yet to be seen. But the action of the Asians in pretty coordinated FX intervention this morning has killed momentum, leaving the market a bit deflated as high emotion fizzles to "now what"? TMM have often mentioned the PIN (Price Is News) function of price, and it is beginning to feel like that right now. The latest falls in prices were pinned (no pun intended) on the FED saying that growth is gloomy and a post-twist let down. But TMM feel that the moves in Emerging Markets were much more relevant to yesterday's moves as a potential opening of third front of the current two-pronged Europe and US-focused global woe story. What is more, a story that involves the saviour of the world having its own cancer was so terrifying that shouting "YOURS!" and running away screaming could be seen as a natural emotional response.
We come in this morning and our way to work was dominated by radio reports of the usual x grillion of wealth being destroyed and how the price falls in the markets are indicative of how terrible things are. This was exemplified by the Reuters headline "Market's 3% Plunge suggests deepening worry". But, as we have mentioned before, the longer the PIN function goes on the more it feeds into the real economy via sentiment-influenced indicators such as Consumer Confidence, PMIs etc and reduced credit availability, and then the whole lot engulfs itself in a vortex of descent. This is where we stand with Europe at the moment, with it heading for recession unless the Eurocrats pull a rabbit from the hat, but for Asia we feel that the PIN function is even greater.
With politicians all around the world proving how the whole dire process of mediafication of politics has produced governments of spineless, self serving, opinion poll watching, issue ignorant, middle of the roaders, it really can't be long before the rest of us have to roll our sleeves up and fix it ourselves. "Right, come on lad's, they haven't a clue". Greece's recent solid commitments to urgent austerity reform then backed by this sort of news "Greek Parliament Vote on Austerity Postponed Due to Insufficient Votes". Yes, its urgent, but we won't be turning up to vote as we fancy a lie in. TMM have to suppress their rage in these instances. Meanwhile the stalemate of intra-European lending goes on. G20 hinted at no more Lehman-like events but what is really needed is them shouting it from the roof-tops combined with an actual recapitalisation of the banks, rather than this tortuous nail pulling of half hearted news headline hints, the last of which shows just so much mindboggling stupidity as the EU Commission says that the banks don't need a faster program of recapitalisation.
TMM are surprised how things have got so bad. Especially as things that used to be seen as good are now perceived to be bad as well.
The price of lots of "stuff" has gone down. This is bad news because the people that own the stuff are made to look sillier than the people that don't own the stuff. Most people own the stuff in some way because that's the way the world works, so most people look silly and they don't like that. This is bad.
The prices of stuff that we use every day (commodities) has also fallen. This is bad news as, though it means we need to spend less on this stuff or could afford more of it, it implies that the other people that we were moaning about buying all of it leaving none for us now don't want it anymore. Which is bad.
Inflation is dead. Despite whatever was said in the 70s and 80s we now really like inflation. So it not being around is bad.
Interest rates have fallen to practically zero. This is bad news as it means that no one wants to borrow money. We would apparently much rather borrow at 15% because this would mean that all is well with the world (which may explain why the Greeks can't see the problem!). But this is bad.
Particles have been found that are able to travel faster than the speed of light. This is very very bad news as it could prove that everything we believe to be true is false.
European and US politicians are too busy fighting their own agendas rather than grasping the nettle. This is very bad news indeed as it could prove that everything we believe to be true is true.
Gold is going down. When a religion dies things are very bad.