Sunday, 21 September 2008

Look out there's a monster coming

A vicar was telling me about a close encounter this week with a city trader. The guy’s face was Pale Grey. We are now definitely in uncharted territory, apparently. On Thursday Andrew Brown drew attention to a new form of “socialism” that, having privatised the profits is now socialising the losses. Commenting on an FT Editorial Andrew suggested:
Extraordinary to reflect that I have lived long enough to see communism die and then the capitalism that replaced it too; to see the nation state and the empire wither away in Europe, and now to return in Asia, and that I have managed to do this without getting very old at all.
As various big UK names hit the skids, naturally, action is being taken to see if financial institutions can renormalise everything. Short Selling was one way institutions seemingly alchemized increased profits (“fertilizer”) out of falling prices (“manure”). Now it’s off the UK menu until next January.
Can the various other ripping wheezes that have inflated fantasies all round get us all back to where we thought we were

Striding towards canary Wharf from just below the horizon, come various other Bogeypersons, threatening the way things have been:
  • An increasingly embattled dollar, withering as the oil-based reserve currency.
  • New energy world order, with big fresh competitive demand from the East, in which state owned big players marginalize the cosy old “Seven Sisters”
  • Debt crisis — stoking trillions of housing loss into mushrooming US public debt, the eventual burden supercharged by desperately socializing AIG insurance losses as well as FM/FM bad debt.
  • Climate Change adjustments about which it becomes increasingly difficult to pretend
Big lumbering monsters, all these, and peak oil? Is this just me, or is it all beginning to look slightly precarious, à la Ezekiel 28, out there?

PS (h/t Kendall Harmon) the NYT reports that the US treasury is likely to pick up the tab on foreign banks’ US debts... Richard Lindsay of HSBC says “this is a positive step forward but it won’t solve the problems of an overleveraged industry...” Hmmm.


FranIAm said...

"a new form of “socialism” that, having privatised the profits is now socialising the losses."

That says it all.

Here in the US I suspect that legislation will pass in the next couple of weeks that -

1)covers the big firms' losses
2)does nothing to help the struggling homeowners
3)grants unprecedented and unregulated power to those in government

One could not make this up if one tried.

I feel like I am in a time warp in which Ronald Reagen and Margaret Thatcher sent something "over the moon" with their policies and now it has boomeranged itself back to earth, scorched by the sun and radioactive to boot.

Steve Hayes said...

Well if it's any consolation in the face of all those monsters, here's a little love: Notes from underground: I love your blog

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