The funny thing is no one seems to pay attention. I had mentioned some weeks back about all those planes flying around over Syria and what might happen. Today, the Turks shot a Russian SU-24 out of the sky for apparently "invading" Turkey for 17 seconds, then their buddies on the ground killed the two airmen who managed to eject and then killed a Russian marine in a rescue mission while blowing up a rescue helicopter at the same time. The world blinked nary an eye. In fact the equity markets closed up at the end of the day.
Maybe the reaction was, "Ah ha. Russia is a paper bear," and to be sure the operational expertise exhibited by the Bear today was considerably less than formidable. Mind you, the SU-24 is no match for the souped-up F-16 the Turks were flying but everything else was amateur night in the Russian Circus. Then again, it's still Russia and it is still Putin, a nut at best, but it is also Turkey and Article 5 which may alone keep things under control and force Putin to lick his wounds and wait to fight another day. I fear this isn't over.
But I can't get over the singular lack of concern world-wide. It was as though nothing happened and yet something very big occur ed. Thanksgiving is a lousy time for crises because nobody wants to deal with one and the tendency is to wait for Monday. I'm not kidding; it's just that the rest of the world keeps on truckin'. Thanksgiving is just another Thursday.
Anyway, we're off to be with family and friends tomorrow, and Monday will probably come too quickly. For those of you that celebrate with us, have a wonderful holiday. For those of you Over There or over somewhere, peace...or at least take a shot at it.
See you next week.
Showing posts with label Turkey. Show all posts
Showing posts with label Turkey. Show all posts
Tuesday, November 24, 2015
Thursday, February 13, 2014
BACK TO WORK
OK. We have a Fed Head that everyone loves and a wide open approval to spend money we don't have without any restrictions, lousy numbers on the economy to which no one seems to be paying any attention as the stock market roars ahead, the Spanish 10 year trading through the U.S. 10 year, The Leader joking with his new buddy, Frankie, that he likes the job because he can do anything he wants and Turkey covering a $1.5 billion 31 year issue in the mid-6% range about 3X. I mean, like, what can go wrong?
I guess there is something to this "new reality" thing because we old guys who sit and watch this just don't have a clue. True, we are looking at another governmental crisis in Italy, but it's Italy for Pete sakes; they have one of those every twenty minutes. The extent to which Greece is broke is finally being recognized but it's Greece for Pete sakes; they're always broke and who cares anyway. The Germans punted to the high court in Brussels who signaled for a fair catch and will promptly take a time out for at least a year allowing Sr. Draghi to say anything he wants and hopefully, not having to do anything to back it up. The Brits are out-performing everybody with a new projected growth rate of 3.4% which comes as a shock to everyone (especially Little Paulie) and the Bank of England which now has its knickers in a twist with interest rates which every day appear in need of adjustment for which few are calling. I'm probable misreading the entire situation but I don't think I've ever seen a time like this one where nobody wants to have bad thoughts and the firm belief is if you don't nothing bad will happen.
I really have to learn more about China because there seems to be some concern there and if I don't know why I'm out of business. Obviously we're in fine shape everywhere else, except for a few spots in Latin America like the Argies and the Vennis but they are rapidly becoming an irrelevancy in their own way much to the shame of both I am afraid. Imagine what it must be like for those mobs to be told that no one cares. 'Bout the worst thing in the world. Uh? I'm actually smiling! On top of that, it didn't snow again today.
I guess there is something to this "new reality" thing because we old guys who sit and watch this just don't have a clue. True, we are looking at another governmental crisis in Italy, but it's Italy for Pete sakes; they have one of those every twenty minutes. The extent to which Greece is broke is finally being recognized but it's Greece for Pete sakes; they're always broke and who cares anyway. The Germans punted to the high court in Brussels who signaled for a fair catch and will promptly take a time out for at least a year allowing Sr. Draghi to say anything he wants and hopefully, not having to do anything to back it up. The Brits are out-performing everybody with a new projected growth rate of 3.4% which comes as a shock to everyone (especially Little Paulie) and the Bank of England which now has its knickers in a twist with interest rates which every day appear in need of adjustment for which few are calling. I'm probable misreading the entire situation but I don't think I've ever seen a time like this one where nobody wants to have bad thoughts and the firm belief is if you don't nothing bad will happen.
I really have to learn more about China because there seems to be some concern there and if I don't know why I'm out of business. Obviously we're in fine shape everywhere else, except for a few spots in Latin America like the Argies and the Vennis but they are rapidly becoming an irrelevancy in their own way much to the shame of both I am afraid. Imagine what it must be like for those mobs to be told that no one cares. 'Bout the worst thing in the world. Uh? I'm actually smiling! On top of that, it didn't snow again today.
Friday, January 31, 2014
WHY SHOULD I WORRY
Krugman has it figured out in his Times column today. Beginning with a brief history of crises starting with Mexico in 1982, which was apparently caused by the onset of deregulation and banker aggressiveness (his words, not mine) that led to the "sudden stop" of lending in 1982 and to economic implosion. From this explanation all else follows in a logical pattern, for Paulie is nothing if not logical. Unfortunately, as if too often the case, Paulie is dishonest and incorrect in his assessment.
Prior to 1982, and right at in the middle of the real estate bubble of the early 70ies, we had this new event called OPEC and the great oil shut off to which the West capitulated resulting in a massive increase in oil prices and unheard of new wealth throughout the middle east and in certain countries in Latin America. It also led to massive amounts of liquidity flooding American and international banks, unusable at home, creating a need for it to be "recycled." The recycling went through many of the very countries producing the bonanza whereby future revenues were targeted for repayment of present loans designed for infrastructure development. Make no mistake, this lending was greatly encouraged by governments both here and overseas and banking regulators. Remember, "Countries don't go broke."
The second most important thing to remember is that not all of this liquidity could be sopped up in this manner. There was no capital market for sovereigns in the emerging markets; all the lending was done by banks. There remained A LOT of liquidity.
The third thing to remember is Jimmy Carter was President and Jimmy Carter was an idiot.
The fourth thing to remember is inflation went through the roof and to combat it Jimmy did the only smart thing he did in four years…he appointed Paul Volker as Chairman of the Fed, and finally,
The fifth thing to remember is Paul killed inflation, stone, cold, dead with interest rates north of 15% but at the same time he killed Latin America as well.
Now little Paulie wont tell you all that because his solution to everything is for western governments to engage in huge amounts of deficit spending which will create demand which will cure all things otherwise we will face bubbles and recessions forever. Unfortunately, near history--not theory--seems to suggest that improper fiscal management is what buggers things up and nothing has proven worse than the nonsenses of the Carter years and the economic disincentives of the present administration coupled with fiscal mismanagement over the past dozen years that encourages…nay, almost forces--investors to seek yield in places most really shouldn't be.
Why should I worry? Well, because I don't think this emerging market thing is over nor do I think it's a mere blip. This could get worse and as I said the other day who cares about Turkey or the Venezulus or Argentina as stand-alones. But throw in India, the weak guys in Euroland and certainly Brazil, and you have the makings…of…something. Don't look for leadership from Uncle; The Leader and his party are in full election crisis mode not that anyone would listen to them in the first place. Unfortunately, though unavoidable on the international stage we command absolutely no credibility. So do us all a favor, Paulie Bubbala, go sit in a corner somewhere and play with your Nobel which you earned when you used to be an economist rather than a political enabler. Crap like your latest effort we don't need.
Prior to 1982, and right at in the middle of the real estate bubble of the early 70ies, we had this new event called OPEC and the great oil shut off to which the West capitulated resulting in a massive increase in oil prices and unheard of new wealth throughout the middle east and in certain countries in Latin America. It also led to massive amounts of liquidity flooding American and international banks, unusable at home, creating a need for it to be "recycled." The recycling went through many of the very countries producing the bonanza whereby future revenues were targeted for repayment of present loans designed for infrastructure development. Make no mistake, this lending was greatly encouraged by governments both here and overseas and banking regulators. Remember, "Countries don't go broke."
The second most important thing to remember is that not all of this liquidity could be sopped up in this manner. There was no capital market for sovereigns in the emerging markets; all the lending was done by banks. There remained A LOT of liquidity.
The third thing to remember is Jimmy Carter was President and Jimmy Carter was an idiot.
The fourth thing to remember is inflation went through the roof and to combat it Jimmy did the only smart thing he did in four years…he appointed Paul Volker as Chairman of the Fed, and finally,
The fifth thing to remember is Paul killed inflation, stone, cold, dead with interest rates north of 15% but at the same time he killed Latin America as well.
Now little Paulie wont tell you all that because his solution to everything is for western governments to engage in huge amounts of deficit spending which will create demand which will cure all things otherwise we will face bubbles and recessions forever. Unfortunately, near history--not theory--seems to suggest that improper fiscal management is what buggers things up and nothing has proven worse than the nonsenses of the Carter years and the economic disincentives of the present administration coupled with fiscal mismanagement over the past dozen years that encourages…nay, almost forces--investors to seek yield in places most really shouldn't be.
Why should I worry? Well, because I don't think this emerging market thing is over nor do I think it's a mere blip. This could get worse and as I said the other day who cares about Turkey or the Venezulus or Argentina as stand-alones. But throw in India, the weak guys in Euroland and certainly Brazil, and you have the makings…of…something. Don't look for leadership from Uncle; The Leader and his party are in full election crisis mode not that anyone would listen to them in the first place. Unfortunately, though unavoidable on the international stage we command absolutely no credibility. So do us all a favor, Paulie Bubbala, go sit in a corner somewhere and play with your Nobel which you earned when you used to be an economist rather than a political enabler. Crap like your latest effort we don't need.
Wednesday, January 29, 2014
IMAGINE. I COULD BE WRONG…AGAIN!
The Fed tapered again today in unanimous fashion, another $10 million in total. It had been telegraphed for a while so it really wasn't much of a shock according to the Street but the DOW closed down 189+. Now you can tell me all day long that the tapering had nothing to do with it and I wouldn't believe it. It surely has contributed to the emerging market disruptions where investors have associated the Fed actions with higher interest rates on the long end and a lessening of liquidity globally. reaction? Sell the local currency and flee to safety. This is certainly the reading put on the situation by emerging market pols charging that there is a concerted effort to crush asset prices in order to create fire sale conditions. Then again, whilst the central bank heads were certainly aware of what the future would probably hold, the Christinas of the world were very happy to use hot money to fund self-created deficits. But the underlying is true; the expectation of a lowering of liquidity, whether real or not, has spooked equities coupled with lackluster earnings and the suspicion that the great asset bubble of stock prices may just be poised for a puncture.
From the standpoint of politics, the stock market was the only thing going right for The Leader and a major correction in this, an election year, would not be a good thing for either himself or his party. Which is why I still need to be convinced that Janet is going to follow up with a continuation of the new policy unless there is an improvement or reversal of the conditions we see today. In case you missed it, The Leader didn't really help his own cause or remove market jitters with what could only be call an uninspired and uninteresting campaign speech dubbing for the State of the Union address last night. Not quite dreadful but entirely forgettable.
The question I guess is how long is the emerging markets run going to continue and is there a chance of contagion? Too soon to tell I think but while the damage of which the Argies or the Zulus are capable may not be much at this stage, Turkey is a real country and India is not insignificant. If one remembers, all the bad stuff in 1987 started in Thailand for pity sakes and none of the present countries involved or those on the periphery have anything resembling the Fed or the Bank of England as a central bank.
So it looks as though we are going to have to adopt a "wait and see" attitude as to where this goes if anywhere. One would think there is a better way to run the world but I guess not. I'm not sure this is the best time (if there ever is one) to have multiple currency crises which might lead to global liquidity issues because this mob in D.C. is a long way from being the First Team and are anyway far more concerned with domestic politics than with might be collapsing Over There or Anywhere. The good news is it got up to +14F in the Fly-Over Zone today. Gotta work on my sun tan.
From the standpoint of politics, the stock market was the only thing going right for The Leader and a major correction in this, an election year, would not be a good thing for either himself or his party. Which is why I still need to be convinced that Janet is going to follow up with a continuation of the new policy unless there is an improvement or reversal of the conditions we see today. In case you missed it, The Leader didn't really help his own cause or remove market jitters with what could only be call an uninspired and uninteresting campaign speech dubbing for the State of the Union address last night. Not quite dreadful but entirely forgettable.
The question I guess is how long is the emerging markets run going to continue and is there a chance of contagion? Too soon to tell I think but while the damage of which the Argies or the Zulus are capable may not be much at this stage, Turkey is a real country and India is not insignificant. If one remembers, all the bad stuff in 1987 started in Thailand for pity sakes and none of the present countries involved or those on the periphery have anything resembling the Fed or the Bank of England as a central bank.
So it looks as though we are going to have to adopt a "wait and see" attitude as to where this goes if anywhere. One would think there is a better way to run the world but I guess not. I'm not sure this is the best time (if there ever is one) to have multiple currency crises which might lead to global liquidity issues because this mob in D.C. is a long way from being the First Team and are anyway far more concerned with domestic politics than with might be collapsing Over There or Anywhere. The good news is it got up to +14F in the Fly-Over Zone today. Gotta work on my sun tan.
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