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Be Prepared…

Independent trader, Alesio Ratsani caused quite a stir last night with this interview. In his view, there’s going to be a crash, and everyone should get prepared. Well, I hope he was short when he said it, because the market’s up 2% off the open the day after this interview.

His rather juvenile “Goldman Sachs rule the world” comment is typical of traders who are in awe of that company. Goldmans doesn’t even rule the markets, they’ve just made a couple of decent calls recently (and more than a few bad ones). In saying this, and the deliberately provocative “I dream of a recession”, Mr Ratsani has pandered to the fear of every lefty on the planet. I am sure he had fun. I certainly enjoyed the look of disgusted incredulity on the BBC Bird’s face.

So disturbing did Prodicus find this, he e-mailed me. My good friend, NorthBriton45 also fell into the trap, concluding.

“…it confirmed like nothing else why the notion of a free market is in reality anything but and would strip power away from so many completely innocent people.”

The depths of confusion that comment reveals! Mr Ratsani and people like him don’t control the markets. Nor do they strip power away from innocent people. Quite the opposite, in fact. There’s no moral component to the market going up, or the market going down, and everyone has the opportunity to profit both ways

If you’re convinced mr Ratsani is right, ring me and ask to buy the Deutshe bank Short FTSE100 ETF or ‘XUKS’ for short. I can have you short the market in 5 minutes. If you’re extra sure mr. Ratsani is right, try a geared short ETF*. That’s before you start writing options, spread-betting, or trading CFDs all of which you can do just by picking up the phone. Condemning the trader for making money on the short side, is like blaming the surfer for the wave. Markets don’t cause recessions, whatever traders dream of at night. They respond to the likelihood of one.

I used to work on a trading desk. I’ve seen people like Mr Ratsani, extremely pleased with themselves as they ride the trend. As their overconfidence in their own genius becomes pathological as their winning streak lengthens, they take bigger positions. I once saw an independent trader lose a years’ income in 20 minutes. He then went on to lose his trading capital. And his house. It took an hour, before he started destroying things around him and was escorted off the floor. We never saw him again.

The markets have been stuck in a bear market since the peak in 2000 at which time the share-price divided by the earnings per share (the PE ratio, a key measure of whether the market is cheap or expensive) was 42. That is each share was worth 42 times the profit to which it was entitled. That figure is now 9 times. The last time the market was that cheap was in 1979/80, at the foot of a 20-year bull market. In the short-term, I don’t know what is going to happen. But if your view is years, the market is cheap, and paying a decent yield NOW. When the bond bubble and gold bubbles burst (they will, some time) there will be a wall of money flooding into shares.

Mr Ratsani may well be right. There may well be one final capitulatory crash but each and every time austerity has been attempted as a response to recession, it’s worked. To my mind the Plan to allow a 50% haircut on Greek bonds while gearing up the stability fund and buying Italian and Spanish debt with it, looks credible. And in any case; bankrupt governments? Meh. They’re not necessarily bad for business, indeed their retreat from activity will encourage growth.

I have not seen everyone so universally bearish, which means we’re near the point of maximum fear. Which means we’re near the bottom. Like mr. Ratsani, I’m prepared for the crash: I’m waiting to buy.

*N.B. Do your own research, this does not constitute investment advice, yada yada…

Here’s the Daily Mash on the subject.
Update 1: It appears mr Ratsani may indeed be a spoof: is he one of the Yes men?
Update 2: It appears Mr Ratsani is NOT one of the Yes Men. Forbes have spoken to him.

QE3 won’t work, the cuts will.

The Bank of England has indicated that it is considering another bout of Quantitative easing. This presupposes that the problem in the world economy is insufficient demand, to which a solution is printing more money. If insufficient demand WAS the problem, the incredibly low interest rates would have encouraged investment and spending. The first two bouts of quantitative easing would have seen demand pick up.

They didn’t. We barely scraped out of recession.

What quantitative easing did do was push up the prices of Gold – a hedge against inflation. Up too went the price of Oil, of Commodities such as copper, and therefore share-prices. Much of the money went into banks, so their balance sheets were artificially boosted. The FTSE100, being mostly miners and banks did very well, for a time. Other commodities, such as food also rose as more money chased a short-term fixed supply. House prices in the UK have been artificially maintained at their inflated level. Most of all, Quantitative easing, a policy of buying bonds has contributed to a bond bubble, where the sovereign debt of the USA, UK, Germany, Switzerland and (for a long, long time now) Japan are paying nothing in real terms.

The cost of this policy is borne mainly by the poor. Inflation has been explicitly blamed on Oil price rises and rises in the cost of , especially in food hurts the poor. While the main beneficiaries are people with assets – the rich. Labour’s left however is clamouring for MORE intervention in the economy, but this isn’t a Keynesian recession caused by aggregate demand. Therefore Keynesian solutions such as fiscal stimulus (spending money, or cutting tax) won’t work any more than monetary ones, at least until the Government books are nearly balanced. So Labour’s solution – to keep spending until we’re Greece won’t work.

So if it isn’t demand, what is causing the problem? First there is a lack of investment opportunities. Whether this is a cause of or caused by the excess bond issuance crowding out other investments is moot. What’s certain is the low interest rates and negative real yields are shielding governments from the effects of their two decades of profligacy. Germany, the USA, Italy and Japan all have enormous stocks of debt. Thanks to Labour’s 10% deficit, the UK is still catching up fast. Most of the debt is internal, to pension funds and citizens of the states involved. The External debt, especially the USAs is mainly bought by China.

This has the effect of keeping the Chinese currency down and the Dollar artificially strong. What this does is boost exports from China at the expense of domestic demand. This is, in effect keeping Chinese poor to allow the Chinese Government to sit on an enormous pile of Dollars. At some point, this has to end. The Chinese will have to allow their people to buy French handbags & Wine, Italian Clothes, German Cars and English Shoes at the cost of devaluing their Dollar reserves. A fall off in demand for Western government securities will force (or allow) Governments to cut spending even as real interest rates rise. As bond prices fall, and the bubble bursts, money will flood out of treasuries and look for more productive investments.

So, can cutting Government spending faster, closing the deficit and restricting the issuance of Government debt help without the Chinese releasing their reserves? A restricted supply of Gilts would lead to the real interest rate falling, helping with deficit reduction. This doesn’t really help prick the bond-bubble, but restricting the supply of Gilts will drive more money into the productive economy. Furthermore the means by which spending will be cut faster – firing and not hiring people in the public sector will re-weight the economy faster towards the private sector. In the Last Quarter, the public sector lost 111,000 jobs, but the private sector gained 41,000. Year to date, the figures are 149,000 fewer public sector workers and 159,000 more private. The cuts are beginning to do their work, and the private sector, against the stark warnings of the left, is taking on the task of picking up the slack. Since public sector employment started falling in the first quarter of 2010, the Private sector has increased employment in every quarter. That’s 617,000 jobs created for 290,000 lost in the public sector. Each of those public sector jobs lost is one fewer wage bill. Each of those extra private sector jobs is one extra tax-payer. This helps reduce the deficit.

But it’s more than the reduced deficit. Most public sector workers aren’t the Nurses, teachers, firemen and doctors which represent the public sector in the fevered imagination of the Left. It’s bureaucrats, so there’s another benefit of having 290,000 fewer of them: They’re not sticking their clip-boards in the way of business hiring and investing. These bureaucrats aren’t unemployable either. For a decade, business has been crying out for literate, competent people who are capable of turning up to work in the morning. In many parts of the country, these people have been working for the state, which has effectively crowded out private sector employment. With that option no longer open, the Private sector is now able to find the people to provide the investment opportunities for capital which have been so lacking since 2005. The fact is this recession, like all recessions is down to malinvestment. In this one we’ve over invested in public sector prod-noses and under invested in the productive private sector.

This has been multiplied across the entire western world, and added to imprudently low interest rates as Governments have pumped money into the economy in a desperate and futile attempt to keep the party going. This monetary and fiscal “stimulus” has had the same effect as moving off beer and onto vodka. Quantitative easing is like offering round the cocaine in an attempt to keep inebriated guests dancing at 4am. The conversation’s still nonsense, but the hangover will be much, much worse as a result.

If the Chinese government can do a bit for us and allow their domestic demand to rise with their currency too, we (and the Chinese people) will be thankful. Chris Dillow argues against the usual reason for stimulus not working (as per this paper, often cited by Tim Worstall & Others including me on discussiong about “stimulus”) keeping suggesting that it raises the currency, harming exports. In this recession, that might not be the case, AUSTERITY in the west may weaken our currencies relative to China’s by slowing the flow of treasuries & gilts which are being purchased by the Chinese in order to keep western currencies artificially high.

The “double-dip” is a misnomer. We’re witnessing the last gasp of an asset and credit bubble which started to burst in 2000 and it ain’t going to be pretty. In truth, we’ve barely left the recession which started in 2007. Unless we free up resources – people, capital from the public sector, we will not get growth. BRING ON THE CUTS. More & faster, please.

The Lunatics are in Charge Again.

When market crashes happen, there is always some politician who blames “speculation” for the fall in share values. Specifically “short-sellers” are blamed. This is where stock is lent (for a fee) to someone, who then sells it hoping to buy it back later at a lower price, pocketing the difference.

By banning this process, governments hope to stop the markets falling so fast. However it doesn’t work.

  1. It signals panic, causing long-only investors to sell out
  2. It causes the unwinding of pairs trades (where you go long for example Barclays and Short RBS) – this means buying RBS and selling Barclays.
  3. It forces buying of the bad stock, which often has to be paid for by sales elsewhere.
  4. by removing a significant chunk of the market’s power to signal the correct price, volatility often increases.

Europeans often blame “anglo saxon capitalism” for their financial crises. This one, however can be laid squarely at the door of that stupid political vanity project, the single European currency. Banning short selling won’t change the end result: The suffering of the People of Southern Europe.

That S&P Downgrade. The Music’s stopped.

It’s important to understand exactly what the ratings agencies do. Their ratings are merely opinions. They are not regulators, though regulators take their work rather too seriously. They do not set rates – the market sets rates – though they take rather too seriously the ratings agencies’ opinions, mainly because it allows lazy traders to price the risk of a given security according to their rating without doing that boring maths stuff, or any tedious analysis.

The USA is not about to go bust, but the deficit is rising, the debt is rising, and rising at an increasing rate. This is President Obama’s “stimulus” program, and it has failed utterly, just as every other stimulus program everywhere has failed during this crisis. The problem is that of decades of Governmental overspend. In the USA the benefits of relatively low tax-rates are eaten almost entirely on increase health care costs, something Obamacare does almost nothing to address; it just moves the burden a bit from private to public. So the western world entered the financial crisis with Government spending between 40% and 50%, as Governments found it easier to deliver jobs by borrowing to build a bloated state bureaucracy and generous but inefficient state services.

During the cheap-money boom running from the late 90’s to 2008 economic growth was accelerated by the money borrowed by Governments, and the money borrowed by people against the rising value of their homes. Public and private debt across the western world grew as Governments and home-owners spent cheap credit. It was the household debt, sliced and diced by ex-ratings-agency employees in ways to game the algorithms to generate the necessary grades to allow investors, who don’t look too closely under the bonnet, to buy them.

House-price inflation is just inflation, but this was not captured in statistics used by the central banks to set interest rates. Gordon Brown chose CPI, which excludes most housing costs, instead of the far more appropriate RPI, which doesn’t when setting the central bank free to set rates. As a result, British interest rates were too low during the 90’s or 00’s. Similar sleights of hand happened in the USA. Of course it was the private sector credit which went pop first – and the web of debt, and the financial instruments secured upon it fell apart and banks went bust. Ireland and Iceland were bankrupted by the cost of bailing out the banks.

A chunk, but not the lion’s share of the UK’s public debt is the cost of bailing out the banks. But the UK was running a deficit BEFORE the crisis, as was the USA. Governments were trying to keep the party running by borrowing money. Eventually the music stopped. The size of the UK’s and Ireland’s deficit is partially due to the collapse in Bank’s tax-bills which had underpinned public spending. In the USA, the Bush-era tax-cuts (and discretionary war-fighting) are the main reasons for the deficits. the Bank bail-outs (and that of motor manufacturers!!!) were the main reasons in the US. Governments desperately trying to keep the music playing by pulling the “stimulus” levers on their monetary (low interest rates) and fiscal (excessive state spending) levers.

So the wheel came off the financial system, leading to lower tax receipts from that sector. The correct response would have been to cut spending to reflect the new reality. But for the last 2 years, countries with open economies and floating exchange rates, whose policy makers surely knew that the fiscal multipliers were probably less than one, sought to “support” the economy with continued state spending.

This attempt to keep the party going was doomed to failure. Now for the good news. The US and UK political systems and indeed democracy, are mature enough to call “enough”. The Tea Party caucus stopped Obama’s lunatic stimulus program and demanded a return to balanced budgets, and crucially they called for the majority of this fiscal contraction to come from spending cuts, not tax rises. In the UK the electorate was persuaded that ever more spending was not the answer and elected a Conservative-led coalition which had not shied away from the need for spending cuts. In the UK spending cuts are about to start, or “bite” as the BBC keeps telling us. This may be expansionary, if it means that confidence in money and the economy returns.

The UK and USA are going to be Okay. Our public finances will be brought under control. The USA will regain its AAA rating in time, and we may even experience growth while doing it. (This will surprise the Keynesian and the BBC).

The economies of Southern Europe don’t have the excuse of bailing out banks for their crisis. That can be laid squarely at the door of the Euro, a political vanity project which is now destroying economies and lives, because sharing a currency doesn’t make Greeks or Italians into Germans. The ultimate cause though is the same. Decades of cheap money artificially boosted the economy leading to an asset price boom. Governments unshackled from the constraints of the markets were able to borrow to buy votes, until bond traders noticed that the Greeks and Italians were not behaving like those parsimonious Germans and started to drive down the price of their bonds. The music has stopped, the money must be paid back, and Governments MUST cut their cloth according to their means.

Who’s going to spend more to close the gap? Well that’s obvious. The Japanese people have to start spending their savings (while their government reins in its spending). The Chinese government will find the returns available on its surplus heading to zero if it continues to buy dollars to keep the Yuan down. They will have to start running surpluses and let their currency appreciate.

It ain’t all bad. The world has plenty of demand – 2 Billion south and east Asians are getting richer faster than ever before in the greatest expansion of wealth in history. Why aren’t we celebrating this, and seeing it as an opportunity? What we need is Governments to realise they can’t and shouldn’t run deficits or surpluses for ever, and the less they manage the economy, the better that economy functions in the long-term. Indeed neither should people run surpluses for ever: You can’t take it with you. The world’s financial crisis are simply shocks which change behaviour to iron out these imbalances. It works, eventually.Link

“Casino” Banking

There’s an idea, not a new one by any means, doing the rounds that investment banking and retail banking should not done by the same firm because the risky “Casino” bank could pull under a “safe ‘n boring” retail bank, and this is the main objection to Bob Diamond’s promotion from running BarCap to running Barclays PLC. Never mind that Bob Diamond’s business kept Barclays out of the grubby maw of Government – he’s the “Unnacceptable face of the Bonus culture”.

It may seem obvious that investment banking is risky, but the evidence does not back this analysis up at all. Nowhere did investment banking losses pull a retail bank down, or requrire one to take government bail-out money: let’s look at the UK banking sector:

Lloyds TSB: Safe, solvent, straighthforward Retail bank, until it was persuaded to buy HBoS by Economic Jonah, Gordon Brown.
HBoS (Halifax, Bank of Scotland): mainly retail, Large Mortgage Business, which went belly-up and took Lloyds TSB with it too.
Royal Bank of Scotland, very small investment bank, Largest UK retail operation, big Corporate loan book, whose purchase of ING ABN Amro strained its balance sheet to breaking point. It’s failure was hubris, not Investment banking.
HSBC: Universal Bank, large global retail and investment banking operations, now trading at the same shareprice it was before the crisis, and is still paying dividends.
Barclays: Large UK retail bank, overseas operations, buccaneering and ambitious investment bank, who were raised funds from private investors and just managed to keep out of Government hands.
Standard Chartered: International corporate and retail bank, mainly Asia and Africa – no problem at all.
Northern Rock: Ex Building society turned Mortgage and Retail, bailed out by a Labour government because they couldn’t bear to see anyone make money and wanted to save jobs in key marginals.
Bradford & Bingley: See Northern Rock. Eventually bought by Spanish banking group, Santander.

Let’s look at the evidence: Of the two “universal banks” listed in the UK, neither had to touch the UK taxpayer for money. HSBC was able to cope with the crash on it’s own resources and Barclays was able to use its contacts from the investment bank to touch sovereign wealth investors, who have now been paid back. The banks which had got into trouble were either Mortgage banks without a large retail business from which the Mortgages were funded: Northern Rock and Bradford and Bingley, or they were banks who sailed close to the minimum Capital adequacy ratio like Royal Bank of Scotland. Or, like HBoS, Both.

In the USA, the all but Lehman Brothers and Merril Lynch of the Large investment banks survived. Small savings and loans have gone bust all over the place, and only one Universal banks, Citi got into real difficulty, and it was its massive retail operation which pulled it under. The evidence that the “casino” banking is a bigger risk than lending to Joe Sixpack to buy his grotty suburban semi, is just not there, and anyone who uses the phrase “casino” banking can therefore be ignored on any economic subject, unless you take the view that in the economic casino, investment banks are ‘the House’, which is very good, safe and profitable business indeed. But I don’t think this is what ex-Labour MP Vince Cable means by “Casino Banking”.

The fact of the matter is that Governments in the UK, USA and elsewhere have been stoking the money supply for 30 years. They have been encouraging banks to lend “innovatively” to enable “ordinary people” to “get on the housing ladder”, which in practice meant encouraging, or compelling, banks to lend large sums at great multiples of earnings with small deposits to people who were expecting house-price inflation to do the work of paying off the loan. There is a banking phrase to describe these people: “poor credit risks”. Some banks in the UK became dependent on wholesale markets to fund their loan books, and when this dried up, the banks collapsed.

It’s interesting that much maligned buy-to-let investors allowed Paragon, an entirely wholesale financed mortgage business to survive because they lent to good credit risks with big deposits. The old rules of banking still hold. If you’ve a low income, you can’t have a loan, sorry. It’s not the bank’s job to fund a life-style.

The banks that collapsed because the merry-go-round of phantom money could not go on for ever because house-prices couldn’t go up for ever. Eventually the money to fund the bubble was pulled away, and those with unsustainable business models fell over. The proximate cause of this failure was the failure of the wholesale market, but the ultimate cause was a belief, encouraged by politicians for two generations, on both sides of the Atlantic, that the house-market would be a better source of wealth than anything else.

House prices are further away from sustainable multiples of earnings than at any time in history. The Baby-Boomers who own them are going to sell as they’re herded into care homes or move down into bungalows, and their children will fund their retirement buy buying those overpriced assets which will return precicesly nothing over the next decade or more, if we’re lucky. Anyone who thinks they’re going to make money on mortgaged property is a loon.

Which leads us to Banks. They too are not going to make money from lending to people to buy houses that are going to fall in value, so we’d all better get used to bigger deposits and higher rates. Or we can encourage another bubble by forcing the banks to lend to poor credit risks again. Anyone think that’s a good idea? There is no difference, fundamentally, between lending to a person to buy a house and lending to a company to fund its operations. If the bank thinks the company or person is going to struggle to repay, the bank takes action so that it recovers as much of possible of its money. Which is why the left’s whinge about Connaught going bust is just. It makes no difference that it’s “State owned” RBS that did it, Connaught was loss-making with dishonest management, and went bust. It happens, and given that it’s in property services, the market will not improve enough to change things. The truth is that banks were too willing to lend to speculative companies in the good times, and they’re probably a little too risk averse now. No-one said the market’s perfect (just better than economic planning).

So, companies will be denied debt finance. So what options does a good, viable company have when denied bank finance? The other sort of finance: Equity, either private or public, and here investment banks come into their own. If they’re unwilling to lend to you, maybe they will, for a fee find someone who will invest who has a greater risk appetite. That too is a banking service, and there is no reason why Banks shouldn’t do both. And why should retail deposits be invested ONLY in mortgage loan books? Couldn’t banks invest in equity and company debt through an investment banking arm? I thought lefties were against debt and funny money, and liked “investment” in businesses?

The unholy alliance between the left and the ignorant daily-mail right can bleat all it likes about “casino” banking. The truth is that the investment banks did a lot better than both Governments and retail banking during the crisis because of the idiocy of Governments and the Public in buying assets they couldnt’ afford and spending more than they earned. Investment banks like BarCap and Goldman Sachs didn’t do this, and were able to pick up quality assets in the firesale caused by the inevitable crash. And surely spreading risks in different business areas is a good thing?

Punishing the winner looks a lot to me like sour grapes.

It seems that Clegg ran on this today at PMQs, and wants to seperate Retail and Investment banking. Let’s hope grown-ups point out evidence shall we? Too big to fail is too big, it doesn’t matter what businesses they’re in.

Those unfunded pensions.

The state employs, give or take, after Gordon Brown’s lunatic handling of the economy about half the people in the workforce. Many of these people are on unfunded final salary pension schemes. What people who want to suggest that “we’re broke” do, is add the net present value of some 20m public sector pension liabilties and tack that onto the National debt. Then they add the banks (at an effective value of the assetts of Zero) and suggest that we’re much, much worse than any other country in the world.

Now what I am about to say is not to defend Gordon Brown’s idiocy. He took the Deficit to 12% of GDP, and that is utterly unsustainable and probably criminal. But even at this rate, given Japan’s example, we could keep going for a several years before the shit hit the fan. When a quarter of Government spending is borrowed, you do not need to make stuff up to make it appear that we’re in a mess. The fact is that the UK started the Noughties with the lowest share of public debt as a proportion of GDP in the developed world. Because of Browns tax rises since 1997, and sticking to Tory spending plans, he took Debt:GDP from a creditable 43% to an excellent 30% by 2000.

Since then, he’s spent with the care and concern of a man urinating after 13 pints. That is not in dispute. The speed at which the debt is increasing is the issue. Not its absolute size, which for the UK remains lower as a percentage of GDP than Germany (though we will overtake them soon) France, Italy, the USA and the outlier on the list, which does not have a AAA rating, Japan.

I digress. People with an axe to grind often whack a number they claim is the unfunded public pension liability, and another “the cost of the bail out”. Both are meaningless.

The banks are financial assets on which the state is likely to make a return. They certainly are not going to lose everything they invested. To add that to the debt makes no sense at all. Unfunded pensions are more complicated.

Why are pensions unfunded? For the simple reason that a manager of a pension pot of the scale nessesary to fund the civil service superannuation scheme would wield more power than the Chancellor, and probably more power than that of the Prime-Minister too.

So the ‘liabilities’ have become just another ongoing cost of employing existing civil servants. To add a net present value (what’s the discount rate going to be? how are you forecasting indexation?) is to apply a meaningless number to a problem that isn’t there. There is no rating, the cost doesn’t go up or down with the country’s Credit rating. It is not ever going to be called in one go. It is an annual cost built into budget forecasts. No country in the world puts a value on the unfunded pension liabilties of public sector workers, nor does any country “fund” such a scheme (except Norway, but they’re a special case with options not open to the rest of the world). Public sector pensions are paid everywhere out of General taxation. My guess is in the event of a severe budgetary crisis, it will be the welfare junkies who can work who will feel the pinch, not the pensioners, who can’t.

To whack it onto the national debt just demonstrates ignorance. There are major problems with the state’s finances. Public sector pensions just aren’t one of them.

Of course if you wanted funded pensions, the only way to do it would be to have personal pensions for everyone and ban final salary schemes. But that would simply add another burden to the Generation that’s already paying off Gordon Brown’s legacy. That of course is an issue for another post.

On the insanity of banning short selling.

The Germans have mistaken “causing” for “profiting from”. There is so much wrong with banning short selling that I don’t know where to begin.

First, a little about short selling. It is the practice of selling stock you don’t own (selling whilst “short” of the stock) in the hope of buying it back cheaper at some future point. You can either do this “Naked” without owning stock (this is not allowed on most stockmarkets) or you can borrow the stock from someone else for the purpose. On derivative markets you either go long or short depending on which side of the contract you’re on.

Most trading strategies (I’ll stick to equities, because that’s what I know best) involving shorts are “pairs trades” or similar. That is you seek to exploit the difference between two similar, but not identical securities. You go Long (buy), for example Barclays and go Short (sell) RBS. By doing so you hope to profit from the fact that Barclays can still pay its traders enough to stick around, and RBS can’t and therefore can’t make money.

So… what happens when you ban short selling: all those people wisely hedging out market risk as in the above example are forced to buy the stock they consider crap, and sell the stock they consider good. By denying the prospect of hedging, the market’s risk goes up, and the value falls. Basically if you think that banning short selling will prevent “speculators” from “driving the price down”, whether it’s currency derivatives or equity then you’re demonstrating your profound ignorance.

If you’re selling the socialist worker, that’s fine. When you’re running the third largest economy in the world, it’s not so good.

So… the Box-heads have succeeded in giving me the buying opportunity I’ve been waiting for for months. Bravo. And it won’t stop whatever it is – euro weakness, banks going bust you thought you were protecting yourself from. If anything, it creates an imbalance and will make likely anything you’re trying to avoid.

Don’t believe me? look at the charts for the banks around the dates of the 08/09 short selling ban.