Euro-sigh
Very little sense is being uttered at the moment by the various big players in the euro-crisis. As is the case with everything to do with the current mess, the reasons are manifold. Some know what the problem is, but know that it would be political suicide to say it. Others are blind to the real problem, continuing to fight the last battle. There's no single solution because there is no single problem. And each of the problems that there are require solutions that are politically unacceptable.
This is why Wolfgang Münchau in today's FT writes the memorable line: "I do not have the foggiest how this conflict will end". It's both a political problem and an economic problem. It's both short-term and long-term. And its participants (and observers) frequently take moral (principled) stances where moral stances are unwise. Language is being corrupted. No-one makes a statement these days without inserting at least a few value-laden words which, when their speech is broken down line-by-line, actually mean nothing at all apart from "my argument is right because my argument is right".
The good news (from my point of view in that I predicted it, although I'm not sure how good it is for my long-term wealth) is that the Bundesbank is rapidly becoming a significant minority. It's already on its own vs the rest of Europe, and it's beginning to become isolated from German politicians. When Jens Weidmann, president of the Bundesbank, starts talking about things being "unconstitutional", you know that he hasn't got many people on his side, so he's resorting to the law. Those who believe in the paramountcy of the law, or even of the constitution, might care to study the history of 19th century France.
However, Weidmann might be losing the battle in the Reichstag, but that does not mean that he is losing the battle for the minds of the German people.
If there is one constant in the current euro-crisis, it's that most of the electorates are like a three-year-old child who can't understand why you can't go to the fair every day. In fact the only electorate that seems to have "got it", and shown the required maturity to get out of the mess, is the Irish electorate. I'm not sure what that says about the Irish people. Perhaps they are used to having to go to work on Monday after a right good piss-up on a Saturday night.
But elsewhere -- in Germany, in Spain, in Portugal and in Greece, the attitude seems to be "we want it to be like it was before". Germany doesn't want to bail out the Greeks, but it doesn't want to leave the euro, because the artificially low purchasing power parity that this gave Germany meant it had a structural trade benefit that could not be eliminated. In effect, it wants things to be like they were in the 2000s, except that it won't bail out the Greeks, which is what it would need to do for it to carry on being like it was in the 2000s.
Greece, meanwhile, wants to stay in the euro, but doesn't want to pay back all that money that it borrowed. Indeed, its wants to borrow more. The Greece have just about given up on things being "like they were". It's so dreadful there for many people that they would probably settle for something that would have been sustainable in the early 2000s. But now it's too late.
Greece, it must be said, is a basket case. Even thinking of it as being a part of Europe is misleading. Unfortunately for 30 years they were told that they WERE part of Europe, and they wanted a standard of living to boot. How do you put that genie back in the bottle? The nearest parallel is Russia under Yeltsin, where life expectancy fell rapidly. For Greece it would be even worse. You can, at least, understand why Greece hankers for it to be, at least a bit "like it was before".
One way that one can "split" the euro-crisis is into two along the fundamental-structural/crisis-of-confidence dichotomy. Once again language can be our enemy here. We talk of the "pensions crisis" in the UK, but there isn't actually a pensions crisis, because it's money that only has to be paid out gradually. That's the kind of problem that Italy has. Eventually Italy, unless it cleans up its act, will be in big shit. But, for the moment, it could carry on. The wolves were not at the door. BUT, when interest rates for bonds go well north of 5%, then Italy cannot afford to roll over its loans. A crisis of confidence can rapidly become a fundamental problem. If the UK could only borrow at 7% (rather than the laughable "safe haven" status that we currently enjoy) then we would be in as big a pile of shit as Spain.
To solve these Spain/Italy problems "dramatic moves" can make a difference. This is what Draghi tried a couple of months ago, and it kind of worked. However some of the German players seem hell-bent on damaging that confidence again.
For Greece and Portugal, it's less a matter of confidence and more a mater of genuinely running out of cash. It's the difference between spending more than you earn, but being able to service the interest on the loan, and spending so much more than you earn than you can't even service the interest.
I still think that politicians will be too frozen by indecision to do anything that makes a difference, and that this will result in dramatic political upheavals; perhaps not in 2013 or even 2014, but, eventually. Greece basically has to repudiate its debt (in the sense that there really is no other way out), and try to get through the awful years that will inevitably follow without too many people dying. Portugal, probably the same. Does that mean the death of the euro? Not necessarily. The Italian and Spanish problems might, just might, get sorted out if the hardliners in Germany can be shut up, if the ECB can put together a bond purchasing deal that will tide over the two indebted giants. France will be looking for this to happen and, crucially, so will many of the German banks. The chairmen of those banks will have the ear of the president of the Bundesbank. If enough of them tell Weidmann sufficiently forcefully that a collapse of Italy and Spain would mean a collapse of his own financial system, perhaps Weidmann will start worrying less about domino theory, moral hazard and inflation, and more about preventing complete economic meltdown.
++++++++++
We're very llucky in the UK when it comes to movies on TV. In the US you need Netflix or Lovefilm if you want to see anything released in the past 25 years. In he UK we often get stuff on TV only three years after it was made, and that equals about 18 months (in some cases) after it was released.
Film 4 also broadcasts some real gems late at night -- often low-budget, sometimes failures, but nearly always worth watching. In addition Film 4 puts out a fair proportion of foreign movies (and not just the art-house stuff). Add to that the stuff on BBC 4 and, of course, the mainstream stuff on the main channels, and any keen movie watcher (such as me) gets into the same problem as any keen reader (such as me). Too much stuff recorded, too little time to watch it.
I managed to watch "Heat" (1995) for the first time. You would have thought that a Michael Mann/Al Pacino/Robert de Niro movie would have been a must-see at the time, but it didn't happen. Many say that Pacino is heading towards his overacting mania in this movie (think Donnie Brasco and The Devil's Advocate) but I enjoyed it.
++++++++
I've avoided any viruses for a good eight weeks (touch wood) and that's been good news for the training. Strength is up and I managed a single set of 4 x 140kg dead lifts, although looking at the recording of it, the third lift wouldn't have won any awards -- so let's call it 3 & 3/4. Recovery time was good as well. Getting stronger.
++++++++
Poker has been modest. I moved up to 50c-$1 NL after a good few months at 25c-50c. It went okay to start, but September has been a disaster. I was within $100 of my five buy-in stop loss when I decided to drop back just to regain some confidence. It had been the same old story. Run bad, lose a few flips, get outdrawn, and suddenly you start playing badly yourself, playing too many hands and too passively.
Managed to recover a couple of buy-ins already at the lower stakes, although obviously you have to win twice as many buy-ins on the way back as you lost on the way down before you get back to even.
Still in profit for the year, but only modestly.
+++++++++++
I've gone short euro-dollar again (at least I'm up there this year!) getting at £50 a cent at $1.3040 and another £50 a cent at $1.2930. No real target in mind yet. Waiting to see how the trend develops. However, I think that the 10 cent recovery (form $1.2180 to $1.3150) just about exhausted all of the built-up goodwill that the euro exploited after touching the bottom. That gives the euro-bears another few months of the ascendancy, I think.
+++++++++++
This is why Wolfgang Münchau in today's FT writes the memorable line: "I do not have the foggiest how this conflict will end". It's both a political problem and an economic problem. It's both short-term and long-term. And its participants (and observers) frequently take moral (principled) stances where moral stances are unwise. Language is being corrupted. No-one makes a statement these days without inserting at least a few value-laden words which, when their speech is broken down line-by-line, actually mean nothing at all apart from "my argument is right because my argument is right".
The good news (from my point of view in that I predicted it, although I'm not sure how good it is for my long-term wealth) is that the Bundesbank is rapidly becoming a significant minority. It's already on its own vs the rest of Europe, and it's beginning to become isolated from German politicians. When Jens Weidmann, president of the Bundesbank, starts talking about things being "unconstitutional", you know that he hasn't got many people on his side, so he's resorting to the law. Those who believe in the paramountcy of the law, or even of the constitution, might care to study the history of 19th century France.
However, Weidmann might be losing the battle in the Reichstag, but that does not mean that he is losing the battle for the minds of the German people.
If there is one constant in the current euro-crisis, it's that most of the electorates are like a three-year-old child who can't understand why you can't go to the fair every day. In fact the only electorate that seems to have "got it", and shown the required maturity to get out of the mess, is the Irish electorate. I'm not sure what that says about the Irish people. Perhaps they are used to having to go to work on Monday after a right good piss-up on a Saturday night.
But elsewhere -- in Germany, in Spain, in Portugal and in Greece, the attitude seems to be "we want it to be like it was before". Germany doesn't want to bail out the Greeks, but it doesn't want to leave the euro, because the artificially low purchasing power parity that this gave Germany meant it had a structural trade benefit that could not be eliminated. In effect, it wants things to be like they were in the 2000s, except that it won't bail out the Greeks, which is what it would need to do for it to carry on being like it was in the 2000s.
Greece, meanwhile, wants to stay in the euro, but doesn't want to pay back all that money that it borrowed. Indeed, its wants to borrow more. The Greece have just about given up on things being "like they were". It's so dreadful there for many people that they would probably settle for something that would have been sustainable in the early 2000s. But now it's too late.
Greece, it must be said, is a basket case. Even thinking of it as being a part of Europe is misleading. Unfortunately for 30 years they were told that they WERE part of Europe, and they wanted a standard of living to boot. How do you put that genie back in the bottle? The nearest parallel is Russia under Yeltsin, where life expectancy fell rapidly. For Greece it would be even worse. You can, at least, understand why Greece hankers for it to be, at least a bit "like it was before".
One way that one can "split" the euro-crisis is into two along the fundamental-structural/crisis-of-confidence dichotomy. Once again language can be our enemy here. We talk of the "pensions crisis" in the UK, but there isn't actually a pensions crisis, because it's money that only has to be paid out gradually. That's the kind of problem that Italy has. Eventually Italy, unless it cleans up its act, will be in big shit. But, for the moment, it could carry on. The wolves were not at the door. BUT, when interest rates for bonds go well north of 5%, then Italy cannot afford to roll over its loans. A crisis of confidence can rapidly become a fundamental problem. If the UK could only borrow at 7% (rather than the laughable "safe haven" status that we currently enjoy) then we would be in as big a pile of shit as Spain.
To solve these Spain/Italy problems "dramatic moves" can make a difference. This is what Draghi tried a couple of months ago, and it kind of worked. However some of the German players seem hell-bent on damaging that confidence again.
For Greece and Portugal, it's less a matter of confidence and more a mater of genuinely running out of cash. It's the difference between spending more than you earn, but being able to service the interest on the loan, and spending so much more than you earn than you can't even service the interest.
I still think that politicians will be too frozen by indecision to do anything that makes a difference, and that this will result in dramatic political upheavals; perhaps not in 2013 or even 2014, but, eventually. Greece basically has to repudiate its debt (in the sense that there really is no other way out), and try to get through the awful years that will inevitably follow without too many people dying. Portugal, probably the same. Does that mean the death of the euro? Not necessarily. The Italian and Spanish problems might, just might, get sorted out if the hardliners in Germany can be shut up, if the ECB can put together a bond purchasing deal that will tide over the two indebted giants. France will be looking for this to happen and, crucially, so will many of the German banks. The chairmen of those banks will have the ear of the president of the Bundesbank. If enough of them tell Weidmann sufficiently forcefully that a collapse of Italy and Spain would mean a collapse of his own financial system, perhaps Weidmann will start worrying less about domino theory, moral hazard and inflation, and more about preventing complete economic meltdown.
++++++++++
We're very llucky in the UK when it comes to movies on TV. In the US you need Netflix or Lovefilm if you want to see anything released in the past 25 years. In he UK we often get stuff on TV only three years after it was made, and that equals about 18 months (in some cases) after it was released.
Film 4 also broadcasts some real gems late at night -- often low-budget, sometimes failures, but nearly always worth watching. In addition Film 4 puts out a fair proportion of foreign movies (and not just the art-house stuff). Add to that the stuff on BBC 4 and, of course, the mainstream stuff on the main channels, and any keen movie watcher (such as me) gets into the same problem as any keen reader (such as me). Too much stuff recorded, too little time to watch it.
I managed to watch "Heat" (1995) for the first time. You would have thought that a Michael Mann/Al Pacino/Robert de Niro movie would have been a must-see at the time, but it didn't happen. Many say that Pacino is heading towards his overacting mania in this movie (think Donnie Brasco and The Devil's Advocate) but I enjoyed it.
++++++++
I've avoided any viruses for a good eight weeks (touch wood) and that's been good news for the training. Strength is up and I managed a single set of 4 x 140kg dead lifts, although looking at the recording of it, the third lift wouldn't have won any awards -- so let's call it 3 & 3/4. Recovery time was good as well. Getting stronger.
++++++++
Poker has been modest. I moved up to 50c-$1 NL after a good few months at 25c-50c. It went okay to start, but September has been a disaster. I was within $100 of my five buy-in stop loss when I decided to drop back just to regain some confidence. It had been the same old story. Run bad, lose a few flips, get outdrawn, and suddenly you start playing badly yourself, playing too many hands and too passively.
Managed to recover a couple of buy-ins already at the lower stakes, although obviously you have to win twice as many buy-ins on the way back as you lost on the way down before you get back to even.
Still in profit for the year, but only modestly.
+++++++++++
I've gone short euro-dollar again (at least I'm up there this year!) getting at £50 a cent at $1.3040 and another £50 a cent at $1.2930. No real target in mind yet. Waiting to see how the trend develops. However, I think that the 10 cent recovery (form $1.2180 to $1.3150) just about exhausted all of the built-up goodwill that the euro exploited after touching the bottom. That gives the euro-bears another few months of the ascendancy, I think.
+++++++++++