-- Posted Wednesday, 12 May 2010 | Digg This Article
| | Source: GoldSeek.com
Rick’s Picks
Wednesday, May 12, 2010
“Phenomenally accurate forecasts”
Because we called the latest Eurobailout a PR hoax in our most recent commentary, we’ll give equal time to a quite different point of view posted in the Rick’s Picks forum. The author is “Cameroni,” a frequent contributor who says the European Union deserves praise for not shunning Greece and the PIIGs, especially since it will require considerable sacrifice on the part of the “haves.” Here’s Cam:
“The European Union must be congratulated. They have acted responsibly by choosing union over self interest and Nationalism. Instead of shunning Greece, shutting her out and locking the door behind them they have instead made a tremendous sacrifice and have opted instead to take a share in Greece’s misfortunes despite the obvious risks. And they have put their collective neck on the line for the whole union by establishing what amounts to an insurance program for the rest of the sick patients in the group. The pain will be shared while expectations of future growth have been lowered.
“At the same time they have sent a clear message to bond rating agencies. You can be replaced. Nobody needs a Rhodes Scholarship anymore to see the clear connection between the Bond raters and currency speculators. Nor do we need a microscope to see how destabilizing those influences can be nor how quickly the global financial system can be brought to the brink of economic calamity. The events of the last two weeks has made it clear to all just how disruptive those influences can be and what negative implications it has for both political stability and global markets. Their blunder will bring on change.
No Child’s Game
“This is not a child’s games anymore. Future financial reforms may well include putting limits on the speculation of currencies. We will see what transpires with the G20 meetings next month in Canada. I think it is safe to say that some dramatic reforms could well be in the offing. There is simply too much at stake to allow the greed and opportunism of a handful of people married to the lightning speed of computers and established market practices to impact the very stability of nations. We just witnessed a very close call with a bad destiny. A Euro in sharp decline combined with extreme fear, even panic and markets in flight. There were no fat fingers. The near crash was precipitated by a panic sell-off that triggered backstops and cascaded the market downward in a whirlwind of computer generated trades. Many investors and some traders were not even present to witness it all except on the six-o-clock news. Suddenly presets and program trading is in the spotlight. Will we allow computers to crash the system any more than continue to tolerate speculators bringing no less than the stability to the European Union into doubt?
“But with so much liquidity sloshing around the system and always on the lookout for better investing opportunities, it has instead found easy kills in currency markets. Fortunes can be made in the blink of an eye. Counties can be ruined. And it is all too easy when the targets are so public and vulnerable and systems are in place to capitalize on those misfortunes. Capital is now being misallocated in the most dangerous and irresponsible way. Short term gains are surely going to lead to big long term losses.
Taming Speculators
“This is not hunting for bargains. It is more like shooting chickens in a barrel. That is why the European Union has done the right thing and why I congratulate them. They have taken steps to tame the speculators and rescued their own currency through policies that will bring stability back to the Eurozone.
“Now if only those pesky Greek citizens would just get on board and cooperate it just might work.”
***
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-- Posted Wednesday, 12 May 2010 | Digg This Article | Source: GoldSeek.com
