Hello! Here in Smolensk butcher shop we plenty musing today on nature of “markets”. What are these things? Plenty powerful, that for sure, as now we see again how they bring global economy to knees and make government policy makers do much poo-crapping in pant.
Of course, some analysts is remind us that markets – financial markets I mean, not places like Smolensk cattle market, where real things, like yak, goat and occasional ageing hydrogen bomb, is buy and sell – are only compose of individuals. These individuals – stockbrokers or bankers for example – is just like you and me with normal taste and enthusiasms, like lighting $300 cigar with $3bn Collateralized Debt Obligation, bathing in Dom Perignon or snorting cocaine through silver straw from cleavage of Lithuanian lapdancer.
But this ignore collective market might.
So, European Union bail out struggling members of Euro. European Central Bank do plenty Quantitative Easing. (This technical term for extreme financial laxative; it promote liquidity, sort of monetary diarrhoea.) But markets, like jocks in changing room, point, shake heads and say package not big enough. But when US cut trillions in public spend, credit agencies say this not guarantee US AAA rating. So markets fall because cuts not sufficient deep – then fall again because cuts too big in context of US economic stagnation. Either way, it disaster for governments, as markets treat their strategy like razor wire treat balloon: reflate or deflate, you torn to shreds anyway.
Greece for example cower before bond markets like Death Star minion before Darth Vader. Papandreou say, “My Lord, yes we have been bit corrupt, and yes we probably borrowed a bit too much, but argggh, that’s quite painful my Lord, but this is nothing compared with say Royal Bank of Scotland, which bought assets valued at more than the fourth largest economy in the world, against a market valuation a mere fraction of those assets my Lord, and huge quantities of those assets are now liabilities, arghsheeeargh, that really does hurt my neck, my Lord, liabilities underwritten by innocent tax payers my Lord, a situation which, if, well, and I only say if, my Lord, you look at it from a certain point of view, makes us Greeks look like models of prudence, yeaaaaaarghfaaark, and our workers, who are quite poor my Lord, compared with the bankers, work the longest hours on earth, after South Korea, so please forgive us...sheeeearghaaaurgh ugh uh.” Bond markets reply “Apology accepted” in voice of James Earl Jones, and strangle Greeks with modest 9 million percent interest rate on its loans. And then stock market strangle them again with crash because (market driven) restructuring of Greek economy mean it got no demand and so no growth.
And same silly analysts say this show market power too great and there need for new global settlement to curb them. But this is big load of Marxist bull stools! No. It show there nothing governments can do in face of market. And brilliant, contradictory, seemingly irrational strategy of market show this. Market decide show government that almost nothing they do is appease them. By demanding fried, scrambled and boiled from same egg, in seeming display of unreasonableness, markets show they in charge. Governments not say no, not call market bluff, not demand they behave like responsible global citizen. Instead they bend backwards, forwards, or over boardroom table with pant down, appeasing markets with various fiscal and monetary Czechoslovakias, and call this statesmanship.
And solution? Abolition of all government and running of world entirely by markets. Yes. Let us recognise where true power is and stop playing silly nonsense games with electoral politic and government of the impotent, by the impotent, for the impotent. After all, market principles work in most parts of my existence. My sex life is governed by laws of demand and supply. My wife Irina don’t demand so I don’t supply. Perfect equilibrium. And my supply of food, vodka and smokes follow demand of my stomach, liver and lungs, with daily consumption of 6000 calories (mostly yak and goat cheese pie), 4 litres of Yuri special 76% proof moonshine, and 80 Gamels (like Camels, but with 180mg tar per cig). Market forces control how I run my shop, without nuisance input of silly government regulators. No one demand I clean floors, counters, work surfaces or cutting instruments, so I not supply these service. Any cases food poisoning is market aberrations counteracted swiftly, by people switching to other Smolensk butchers, getting food poisoning there too, and switching back (as well as by occasional fatality).
So, let markets run things, make plenty decisions, especially as once government out of way, there no reason for traders, investors, bankers, credit agencies, bond markets, equity holders, and hedge funds to act in ways that seem chaotic or contradictory, since they no longer bothered by any silly market distorting state actors who interfere and need be given admonitory kick. No. They only got each other and they perfectly capable of pursuing glorious self-calibrating course of harmonious synthesising of their enlightened self-interests. And there shall be no more death, neither sorrow, nor crying, neither shall there be any more pain: for the former things are passed away.
But in short term, before this glorious reality can be reach, maybe governments should show more respect and understanding to the cultured, omniscient gurus of market. So when economic volatility strike, Obama, Merkel, Cameron: don’t do silly bail out or fiscal contractions. Give markets what they want. Something from small list of things that can appease traders and financiers. Briefly. Send markets crates of Cristal and some hookers. They be happy. For few hours.