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A very good piece from Stratfor on investing and political economy

edited August 2012 in Off-Topic
provides a birds eye view on current investing climate and the European situation. I tend to agree with the assessment that there is no pure "economics" -- there is "political economics".


  • edited August 2012
    What an incredibly incisive analysis. With respect to Merkel, it dovetails beautifully with my thoughts regarding the restraints under which she is working. When Mario Draghi recently made widely celebrated corrective proposals I couldn't help but wonder if he had just gotten off the phone from Angela: "Mario, I can't do much right now because of domestic constraints- maybe it's time for you to run with the ball for a while".

    Many pertinent observations from this article:
    • the historical European trading environment vs the period from 1991 to 2008
    • high velocity trading doesn't work during a political tidal wave
    • the quant's magic formulas are not able to factor in political maneuvering
    • one of the foundations of European prosperity is cracking
    • Merkel is not making decisions; she is acting out a script
    • the purpose of the EU is not primarily economic- it is to stop the wars that had torn Europe apart in the first half of the 20th century.

    As it was in the beginning, is now and ever shall be, world without end.

    Thanks for this, FA!
  • Thank you, FA; I'll have to read this again after returning from vacation.
    My short take, and what has driven some of our house's investment areas, is that after the revaluation of equities from the market melt, and into May or June of 2009 found enough buyers of equity for a basic reason of pricing, regardless of "other". By the beginning of 2010 Europe's abilities and/or williness to begin to deal with problems there that were not unlike problems in this country, started to be recognized. The area still remains at least two years behind the U.S. in dealing with any of the mess.
    Lastly, there remains too many little dirty secrets about the strength and worthiness of many financial institutions, including central banks. I suspect there are enough financial institutions and central banks who wonder on a daily basis whether or not they know enough real truths about "conditions", to fully trust one another. I can not offer any proof, so a reader here will have to use their own judgment about such things. Dirty games and tricks have been in place in the banking/financial sector since the beginning. Tis enough of a challenge for we individual investors to attempt to understand all of the ramifications of unknown and/or withheld information; let alone the trading houses and the machines and to throw into the mix that there are financial institutions, including the large trading houses that have no love loss between them and find no problem if and when another in their industry group crashes and burns; as long as there is no harm done to their own portfolio. Better yet, the remaining may have the support of a central bank to step in and pick up the remaining pieces of a shattered, prior competitor. There surely were some smiling faces, somewhere in Manhattan, when Lehman crashed; knowing the central bank(s) had their backside covered. Knowingly, our house has been invested in/within a sometimes very nasty playing field of finance.
    A sad commentary upon the most ugly side of human nature.
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