Sunday, 21 August 2016

Political risks to the market.

I have read a great article on the financial system at the moment that just sums it all up...

Zerohedge: "Seven Signs Of A Deeply Dysfunctional Market" - Why Citi Is Also Warning Of "Surprising, Sudden, Intense" Tail Risk

Citi Bank is hardly a minor player here... The whole article is well worth a read and describes teh dysfunction in a very lucid fashion. One of the things noted is that the market is not responding to corporate defaults that are at all time highs.

Notable is this line (my emphasis added):
The next three months will see US elections, an Italian referendum which could possibly see the government fall, the potential for helicopter money in Japan, and a combination of negative growth and fiscal stimulus in the UK. What factor could possibly be so overwhelming that it makes none of this worth hedging against?
Iain Duncan Smith today pushed the government to get on with Brexit and I am liking these political interventions making sure that the Brexit vote will be respected... Also notable is this line on the relevant telegraph article:

Telegraph: Start Brexit talks as soon as possible, Iain Duncan Smith demands as Tory splits on the European Union re-emerge
Concerns about backbench rebellions have led to calls for Mrs May to call an early election, with polls putting the Tories more than 10 points ahead of Labour and some experts saying she could win a 100-seat majority.

During an interview with the Observer, Ms Davidson said: “John Major came up to help during the referendum, and we had dinner, and he was talking about how draining it is to have a small majority in the Commons, how it gets you down dealing with your own side.

“He had a larger majority than Theresa, so I can see the temptation. She knows if people want to cause problems, they can do that quite quickly. I would like to think that the usual suspects might behave [now] in a different manner, but we shall see…

“However, it might be seen as opportunistic to hold a snap election less than two years after the last one. There is an aspect of her needing to get on with the job.”

Ms Davidson added: “But I’m torn. Why not get a mandate? Labour called for an election after she became prime minister, so they can’t criticise her if that’s what she does.”
That would be interesting, a snap general election... it is unlikely to happen though in actuality.

WHAT everyone thinks is going to happen when this market does crash though is the stocks will plunge... And I mean PLUNGE... Stocks go down by usually less then 1% on a down day... The overall stock drop of last August (around this time) was huge, it was 1300 points in 3 days. The biggest consecutive day drop ever. (1000 points in two days). That's about 8%.

It did not cause a real panic... Indeed, most normal people did not notice at all.

I have heard before the idea it could plunge by 50%... I don't know... But when it does fall by a large enough amount there could be the failure of the TBTF banks and Bail Ins.

There is an incredible inertia here... It is difficult to focus on this area as being real because these sources of information are so far from our daily reality. However, they are relevant, in my belief... It could happen that we have a stock plunge and a societal breakdown to some extent.

Societal breakdown:

What would that look like? I thought today how the migrants how have arrived in Germany and will not work because they see themselves as 'guests' will get very irritable if they are not given internet, food etc. With the breakdown of law and order there is nothing stopping the native populace from rising up in violent self protection against these people. (Who are known to go in other peoples houses and steal food).

I am not encouraging this, just thinking of it as a normal cause and effect.

Water stopping? Food stopping? Electricity stopping? Internet shut down? Won't be having to go to work for a few days... Violence in the streets? To what extent? For how long?

Having to move to different locations?

I do feel the need to get a little more ready... I have some food and preparations... However... Like I said... Inertia!

Political scene:

UKIP leadership in 3 and a half weeks. Labour leadership in 5 and a half weeks. Italian referendum in October... Donald Trump election in November... Before that possibly Brexit news. Black swans in the meantime.


This very vague prediction is coming... Saturn- Mars conjunction... Let's see what happens:
Then there will be focus again on this law and order, and cause and effect, particularly in relation to the use of masculine forceful, willed energy. (August 24th, E).

No comments:

Post a Comment