Looking back over the past few weeks the financial markets have replicated the motion of a yo-yo. Yes, they have been bouncing up and down not on the financial aspect that surrounds the economy but more on the political spectrum. It is easy to deduce from this there is a huge political influence that surrounds our current markets. In all honesty, the markets are meant to be efficient. They must reflect the precise situation and not be driven by confidence boosting speeches by the politicians. If we take a trip down memory lane the one focus of every Chancellor, Finance Minister and Treasurer has been to keep the markets satisfied.
Question: Why are they so concerned about the markets?
Answer: If we were to have the markets efficient, at this very moment in time they would fall down and stumble to half the current value as that truly reflects the state of our economy. However, the politicians have vested their self-interest in the firms that are listed on the markets hence why they don’t want to see the prices fall.
Question: How about the pension funds that they have put money aside to for the day they retire from office?
Answer: They wish to protect these so that they can make the maximum gains. In a nut shell, they are nurturing the markets in a manner that will bring them financial gains.
I understand that if you are a gambler then yes your interest should be in the financial aspects. However, by being a politician and running a country there is substantially a larger image that must be analysed fully. That involves considering about the people within the economy. Lately this has not been taking place and innocent people are losing out by no fault of their own.
The Eurozone governments have been attempting to bolter all war chests just in case of a financial epidemic. Needless to say, there is one right on their doorstep and it will be the largest Tsunami ever known as it will not take down one or two countries but continents. People have asked me for my opinion on the Euro and whether we should keep it or scrap it. My reply to this is very simple “In a developed economy/continent you are unable to have a single monetary union due to the globalisation that has taken place. The ability for each nation to dictate its own fiscal policy and run their own budget is a huge flaw in having a monetary union. To be under a single umbrella you must all replicate the same method.” What I am portraying here is that the Euro came about far too later than the actual time we should have released such a currency. Really and truly if the Euro had been released in the 1970’s then this problem would have never occurred and it should not have occurred even in the 1980’s.
I saw the markets bounce up a couple weeks ago when Germany said they will help Greece and put aside €1 trillion. I knew this was so flawed not only because it is a huge sum of money but the Eurozone is fully dependent upon Deutschland to bare the weight of all problems as it is the only economy progressing and strongest in all shapes and forms. I said to a dear friend of mine that this is all part of a project known as building castles in the skies and told him within a week the markets will fall. What happened? The markets fell as I predicted. We live in an environment where people are believing anything and not knowing the underlying truth which surrounds the matter.
How many out there feel that Greece should be kicked out of the Euro and have the ability to default?
Definitely myself. I have been vying for that to happen as it will clean the market and we will have a market that is judicial and not flawed. The world will learn a lesson from the Greek disaster.