EYE-BALL Guru on – The World Financial Markets are DUMB – and getting DUMBER …

December 13, 2011
The World Financial Markets are DUMB –
and getting DUMBER …
A s global financial markets oscillate to the value of $trillions every day – up/down – often more than once in a day let alone every other day to day movement – you would think smart operators – those who sit above the daily grind of a dealing room and call the shots would be smart enough to see the wasteful resources being spent when trying to beat the market.

Every dealer knows that at the end of the day – the summary total is a zero sum game – for every winner there is a loser – and all that has happened in a simplistic summary is that the cost of retail Banking has grown and those costs have been passed on to the Banks clients. The cost to do Banking for a customer in the 70’s is a but a small fraction when compared with what customers pay their Banks today.  The fee structure has escalated and continues to do so – over recent years Bank fees represents 30-40% of all Bank revenues.  Then there is the reduced investment returns and the increased borrowing costs or margin creep as its is called in Banking circles.  Banks are now competing with Central Banks in an every increasing pool of speculators and borrowers for liquidity and the end game is profitability.

Managers, Executives, Dealers  and the Big Wigs all know of the ‘zero sum’ game analogy – they monitor their profit and loss positions hourly these days to appease their comfort factor.  Yet they continue to turn up ever day and log in to play the ‘game’ – it is cyber warfare with real money – and for most, the party never ends until someone unplugs them from their access to the game console.

That often comes with lack of profits or Management cutbacks so CEO’s and their line Managers can keep their massive salaries and perks – despite them having Management responsibility for the losses that are mounting.

A screen jock is but a soldier and he/she is sacrificed – the decisions to continue to play the game rests with the Worlds greed and its necessity to feed itself.   Human weakness is at an all time high – morality and conscious are at all time lows … this cocktail mixture is explosive and non-productive as evidenced in several spheres – i.e. war in Afghanistan – an unwinable war yet lives and $billions week are thrown at the problem every week – the markets own inability to draw a line under Europe – the Political corruption to win media favour – the double standards of our leaders – secret sexual habits until they become exposed and then regret is expressed yet the habits continue … the world is a psycotic nutcase and refuses to have or attend therapy.

There was a recent movie release called – “Margin Call”  – that has meaningful connection with what happened to start the GFC.  The movie is as close to the Goldman Sachs part in what transpired as I’ve read or seen.  The movie is ‘deep’ and you won’t find a manual to what happened or who was involved – but the plot is accurate in its context and alignment with what triggered the GFC.

What I don’t get is why everybody is still stuck in the ‘headlights’ like a hare caught crossing the road?

Why have the CEO’s and Central Bankers not allowed poorly managed Banks to fail?  Why have they bailed them out and rendered the taxpayers liable for the debt that ensured?

The complexities of how the markets have functioned since the GFC started late 2008 and into early 2009 – make telling the story of what happened and how the measures taken to fix the problem compounded the existing problems – a difficult process.   There have been several US Senate Hearings along the way – all available on-line – [linked here – search Financial Markets] – and the problem with following the hearing record is that the Senators who asked the questions hardly understood the process.  Their questions are framed by knowledgable staffers yet the answers provided confuse the Senators to the point that follow-ups lose the initiative.   The ‘bad guys’ were allowed to play out their testimony without really being pinned down and made accountable.  It could be said that the process was meant to fail – that the process was just that because ‘justice’ had to have the appearence to have been served.   Nobody has gone to jail – nobody has had to pay back the billions paid in bonuses.

We are now seeing the end of ‘capitalisation’ as we have known it.  The pain and suffering to be endured over the next 1-2 decades will alter the way life exists on this planet – and not in a good way.

If there was ever a time where bravery was needed – it is now – the War being fought through currency values and sovereign debt ratings is an advanced War strategy being fought through Political diplomacy.   If the Leaders fronting up to the table for these negotiations are not smart – and lets face it none are all too bright – billions of people are about to be shortchanged.

Military intervention will be the last resort option – but the lines on maps and the carve up of Nations and their wealth is happening at the moment.  Nations fates are being decided by the measure of their debt and capacity to service that debt.  This is all happening behind closed doors and the volatility in global markets is emanating from the leaks coming from those meetings.  Someone or several insiders are making fortunes from these market gyrations.

The ‘game’ is still alive people – those that are really dead and barely functioning are still of the belief that they are still alive and in the game.  What we have to be fearful of is where we as a Nation ends up when the carve-up is complete.   The USA is a spent military force and spread too thin both in manpower and hardware.  All aligned with the USA will be looking for a lifeboat in the future and with our commodities and resources – we come at a premium – but we will have no ‘bulldog’ to bring to the table – and the real fear is that none of our Leaders have any idea about what is happening.

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