Tuesday, May 18, 2010

I am getting concerned....Are you??

You, the regular readers of this blog, know that I trade pretty much based solely on technical analysis. I don't care about the news but rather the reaction to the news. When I trade, all I am concerned is getting my profits. But let's just step aside and see what's happening in the world around us. I can't help but be concerned dear readers and worry about what's coming next.

The Euro bothers me. Greece bothers me. I am getting worried about PIIGS. The short-sightedness of the governments throughout the world bothers me. Unemployment bothers me. Everyone printing money like there is no tomorrow bothers me. The circus has to stop one day. It will. And I worry it will be my generation, not to even mention the future generations, that will be left with the bill.

Now, let me first say here dear readers, that I am no economist. Am just a simple guy who has a more than curious interest in what's happening around us. And I am sure a lot of you readers are in the same boat as me. Take Greece for example. They are worth around 3% of the GDP of Euro nations. Yet, they are too big to fail. So, the big guns i.e. France and Germany decide to solve the problem by throwing tons of good money after bad money. Don't tell me about contagion et al. dear readers. If the problem is gonna spread, it will and this printing money is going to just delay the inevitable.....after making things worse. You have people rioting on the streets protesting the austerity measures. Now, I believe these measures are very much needed. Two months of bonus salaries??!! You gotta be kiddin me!! But again who pays for this?? The present and future generations of Greece. And these very much needed austerity measures are just going to slow down the growth of the economy. Hmmm....seems like we are going in circles. And don't even get me started on the moral issues at hand here. Greece lied about its balance sheets!! It fudged the numbers damn it!! Where is the accountability? The way I was brought up is that there is no way out until you accept responsibility for your own actions. Oh well....I am not singling out Greece here. They just happen to be the first nation caught in the headlights. I am sure more will follow. Think about California closer to home. When teachers and firemen can retire close to 50, getting pretty much same as what they were earning as pension for the rest of their lives, then something is wrong dear readers!! And who pays for it?? You got that right dear readers. My generation. And the next...and the next.

I could go on all day about the above but let's move our attention at the Euro. Its not surprising its falling. What do you expect when, like I said earlier, you go on throwing good money after bad? Talk about averaging down!! lol. Now, consider how competitive the cheap Euro is going to make German exports. You think China is going to increase the value of its currency now?? No way! Where does that leave us? What about US exports? Till how long can we expect the consumer spending to bear the entire responsibility for the economic recovery? And we are not just talking about any consumers here, but consumers in a society with 17% unemployment rates. Sigh!

Now on to the short sightedness of politicians throughout the world for a second. Let's say Greece, or for that matter any nation, shows the guts and does a great job in implementing the austerity measures. I can bet that in their next local elections we will have some opposition party, wanting to remove the austerity measures and blaming the rest of the world for their problems, get elected. That's just the way democracy works. Everybody wants a quick fix. It pays to be short-sighted.

I hope our leaders are paying close attention when it comes to the crisis in Europe. I hope they are learning something. But I know I am expecting too much when I say that dear readers. Something is wrong somewhere when people with advanced degrees are trying hard to get census jobs. Something is wrong when people who acted immaturely and irresponsibly get bailed out. Something is wrong when I have to pay for the house of my neighbor who was stupid enough to buy a million dollar home at $20,000 salary. Something is very wrong when society teaches us that its not OK to fail, but hey its just fine if you fail BIG! Damn it! Where is the responsibility? When will anyone - us, the bankers, the politicians - accept any responsibility? That's the thing about life dear readers....If you try hard enough, you will always find someone or something to hold responsible for all your life's troubles. I know I am beginning to go on a rant here now so I will stop here dear readers. 

But I sincerely believe that we should all begin to get concerned.Very concerned. Not only about the economy, but about the very social fabric of the society we live in. What kind of society will you be handing over to your kids and grandkids? And pray tell me, what did they do to deserve this?


Anonymous said...

I am no economist either. Many governments in developed countries spend more than they take in. So if everyone is printing money, what is the consequence? Here is the list of countries that have surpluses:


Should they be upset? Are they affected by fiscally irreponsible countries? I have no idea.

Anonymous said...

I agree with your reasoning. Look at this country with the pensions that the "public servants" receive. It is out of control and there is no discussion about reigning in the spending.

positiontrader said...

Thanks for the link Anon 1.

I think a time will come when these countries will be upset. Even today, how "strict" can we be with negotiations with China? Can we speak out loud about human rights issues there like we used to? The way the big sovereign funds from Middle East and China are spreading roots in US is something we should be concerned about. How much of Africa is China slowly owning? The effects of our irresponsibility are already out there, we just have to look hard. If we continue on the same path, we won't even have to look hard.

positiontrader said...

Thanks for the comment Alan (Anon 2). I wholeheartedly agree. Let's start right from the President and members of the Congress taking a pay cut. Nothing significant. Just symbolic. To show that they get the problem and are concerned. Not only to all of us, but the rest of the world.

Instead, we have our elected leaders abusing the overseas travel trips by buying gifts with our money etc. Just a small example.

Is It Possible said...

On lighter side:

1. Nice post, although nothing new as I believe all of us who follow the markets/news chatter do already know all of this. I am just wondering how Mayan's knew all this back then when they created that mayan calendar with pinpointing the date of Dec 12, 2012!!!! Surprisingly even Egyptians knew this....

2. Now that I know "TODAY", countries which are printing money will eventually have to pay for it by de-evaluating their currencies, does it me we are back to square one as in buy gold/silver/metals and put them in bank locker!!!

3. Is this what we call shifting of powers!!! During 14th-16th century chinese and japanese in short asian side was powerful, during 18th-19th/20th century due to industrial revolution europe/UK was powerful and in later half of 20th & beginning of 21st century US had the power, so now back to asians IS IT!!!

I guess thats what we call full circle :-)

positiontrader said...

Thanks for the comment IIP.

Yeah, I know all the above is nothing new. In fact, everybody should/must know all this. Or at least I hope they do.

And I certainly see focus of power shifting to China slowly. India and Singapore are going along at a good rate too but India has its own deficit problem to worry about, I believe. But still, it is obviously easier to deal with it if your GDP is growing at a rate of ~8% rather than going backwards.