BOURSE BEDLAM 0, BREXIT BROADMOOR 0
Sometimes it can be very useful to take a few days off from witnessing madness, in order to take in another venue of equal or perhaps even greater insanity as the basis of gathering comparative data. I’m referring, respectively, to the global economy and the British EU referendum.
As parallels for Bedlam, they’re hard to beat. Multivariate debt gets bigger, growth slows, commodity prices collapse, world trade shrinks and austerity continues to exacerbate the situation, media commentators and talking heads observing economic events compete to come up with ever more esoteric explanations as to why this is not a credit-fuelled, stimulation-generated faux Bull market running out of available credit and stimulus ideas. And the rallies keep coming.
Similarly, David Cameron having brought back a letter from Brussels saying nothing (beyond guaranteeing an exemption from doing gym until the end of Term) those Brits wishing to stick with a currency, fiscal, economic and libertarian nightmare still outnumber those wishing to get out by 2%. They are outnumbered only by the EU officials who want Britain to bugger off anyway.
Yesterday, the two mental institutions briefly acknowledged each other’s existence when Boris Johnson’s declaration for the Out campaign caused Sterling’s value to fall off a cliff…and then the stock market to power ahead. It couldn’t have been any other way when you think about it, being the impenetrable outcome of two inexplicable phenomena colliding.
But whereas the arrival of an explosive referendum contest is explained fairly quickly as the politics of untrammelled power versus unlimited money, what’s going on in the world of bourse, currency and interest rate economics is remains difficult to fathom if you miss even a few episodes of the soap opera. Many will appear on our screens to say they know exactly what’s going on, and many will be their contradictory answers. This never inspires confidence. In most debates, there are simply hawks and doves; the current global business bunfight is unique in embracing every avian species from ostrich to cockatoo.
As I opined at the outset, a confection of a bull market is turning into a bear, liquidity and debt crisis. But the circularity of almost uncorrelated contrarian behaviour week by week – even day by day – may never be fully explained by those who come to write the history of it later.
Certainty that collapse is coming requires only the recording of symptomology.
- The mimicking of abject failure
- The inability to pronounce ‘falling demand’
- The oil-stocks-stocks-oil continuum of zero insight
- The ‘Cloud’ (and I do hope someone really is storing it) created by the relative roles of greed, geopolitics, secret fixes, derivative schemes, etc etc
Yesterday, stocks rallied. My best ‘reason’ for this is that the Shanghai was closed – no news is good news, right? – but today it was open and gained….and now the Western stocks look bearish again…but the China stats on industrial shares were poor….so the PBOC piled in with more Yuan to save the index’s face….and maybe that’s why the markets are bearish, but then why does Draghi want to follow Japan into self-defeating zero-sum game Nirp as the Yen strengthens or aaaaaaaaaaaaaaarrrrrrrrrrgggggggggggggggg.
And spookily, I was halfway through that para when Twitter aleterted me to this gem:
Ms Kelly sounds like a good egg with a fine brain. She’s also Head analyst at London Capital Group. Mainly, she’s right.
I am not in the business this morning of currying favour with a smart, attractive woman (although there are worse ways to waste time) but rather to ask the Step Back Three Paces and Think question: why?
Nobody has a clue because globalism has rendered the planet’s network of commerce so ridiculously complex, it has become the task of lassoing ether with one hand while solving a 4D Rubik’s Cube with the other; and because global geopolitics keep the brain busy sorting truth from fiction while the hands are busy.
Our leaders stick with globalist neoliberalism as the default business philosophy because it helps the rich, corrupt and powerful become even more rich, corrupt and powerful. It is failing capitalism because its instinctive, monopolistic protectionism discourages and – if necessary – vapourises the entrepreneurs engaged in real, socially-productive capitalism.
Thus, nobody has a clue what’s going on….and the 3% like things that way. What they haven’t factored in (and being too clever by half, they never will) is that free thinkers of every shade have all the clues joined up in the right order when it comes to what must happen eventually – viz, the use of dysfunctional greed to pauperise those who drive mass consumption means globalist mercantilism will eat itself.
Tell people you’re a communitarian capitalist, and they perceive you to be some kind of bourgeois Swampy. Examine the facts and the case histories, however, and it makes sense. On that note, we return to the start of this piece. ‘Modern’ Homo sapiens doesn’t make cultures that make sense. Hence the rallies of Bulls and the Majority of Stayers.