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Före detta hedgefondförvaltare, partner och VD på Futuris som utsågs till Årtiondets hedgefond i Europa för perioden 2000-2009
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Brexit - the good, the bad, the ugly

Summary: a Brexit might finally trigger a re-set of global financial markets. Unfortunately massive stimulus will follow that will make everything even worse than today. And a lot of innocent people will lose their livelihood.

deflation inflation sprezza


 

The good thing with a Brexit is that it might catalyze a long overdue re-set, just like the Lehman Brothers bankruptcy (almost) did.

The avalanche is ready and more or less inevitable. We're just waiting for the right snowflake to set it off. And, the longer it takes the worse it's gonna get.

Lehman had the chance to do it with not too much damage, if the Fed just had backed off after its initial efforts, and let more banks and insurance companies fail. Then we wouldn't have piled debt upon debt, encouraged massive moral hazard and caused enormous malinvestments due to artificially low interest rates.

A Brexit might set off the avalanche. At least a man can hope for that. If it doesn't, it will happen later -which is worse (except for the authorities, that get one more day in the light, one more day to hoard assets). Just as with earthquakes and avalanches the instability is already there, the damage will happen, and the longer the build-up the worse the cataclysm will be.

What's bad with a Brexit is that the deranged (or possibly plain ignorant) twits in charge probably without a doubt would try their hands at the most ridiculous stimulus efforts ever witnessed by humankind. And that's even before the commencement of a true re-set in the wake of a Brexit. Then, I'm sure Yellen and Draghi would make Kuroda's attempts, at monetizing the entire Japanese government debt as well as its stock market, look timid.

kuroda

The ugly? A lot of innocent and poorly prepared people will lose their jobs. It's just that even more people will be hurt the longer it takes before the re-set is allowed to happen.

The probable? The UK will remain in the EU and the slow and steady march toward doom can resume, with Draghi laughing madly all the way to the bank.

Wait, he's already there...

Mario-Draghi-laughing

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