The photo really does not do me justice, I feel far less intelligent than I look but I digress.
Yesterday’s release of jobless numbers and the subsequent market reaction reinforced my view of my suspect cognitive abilities: Since the market can never be wrong, I must therefore be wrong/ stupid. Looking at the comments posted by the financial journous I again spotted the usual idiotic remarks about safe-haven trading resulting in gains in the USD or higher prices in bond markets.
The USD index is above 80 points again and I wonder who the brainiacs are who are buying US treasuries on bad news. Maybe I am wrong, loosing additional tax payers who are supposed to pay for these government debts might be a positive economic indicator, it might even be as positive as issuing additional bonds to pay for the additional social security benefits now required.
I just had a light bulb moment: When people lose their livelihoods the government can borrow money from the Federal reserve (at virtually no cost) who can print infinite money (at no cost) to pay the jobless social security benefits which they can in turn spend to feed the consumer based economy, You can therefore have a vibrant economy at virtually no cost. If everybody would lose their jobs we can sort this mess out quickly!!
I suppose there are a lot of really cleaver investors out there who unlike me can spot real opportune deals, for instance the heavy volumes experienced in the insolvent General Motors shares, I would never have thought that buying the share of an insolvent company could lead to anything else but the loss of ones own capital. After all, shareholders are the very last inline to receive a disbursement from the wounding up of a company. The secured bondholders are not even going to get 25% of their capital back. But like I said maybe it is just me being stupid.
A friend send me the following excerpt from an anonymous author, who might have had a captive audience with the financial gurus of the developed world and maybe this accounts for the 544billion USD in currency swaps used to play the forex and bond markets
It is August. In a small town on the South Coast of France, holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt.
Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.
The hotel owner takes the banknote in hurry and rushes to his meat supplier to whom he owes E100. The butcher takes the money and races to his supplier to pay his debt. The wholesaler rushes to the farmer to pay E100 for pigs he purchased some time ago.
The farmer triumphantly gives the E100 note to a local prostitute who gave him her services on credit.
The prostitute goes quickly to the hotel, as she owed the hotel for her hourly room use to entertain clients.
At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his E100 back and departs.
There was no profit or income. But everyone no longer has any debt and the small town people look optimistically towards their future.