Once more the markets are in disarray with the fall in the oil price and now, the fall in copper.
In
times past it would have been thought a good thing to see the price of
oil falling. Oil is a constituent in the price of so many things and to
see it fall is now apparently a foreboding of bad news.
Of
course for the producers and the men and women who work in the
industry, these are troubling times but one would have thought for the
world of commerce at large and particularly for the consumers of
products that are falling in price, this is very good news particularly
when wages have been held low for a number of years and disposable
income is squeezed.
But
no the economists, at least the ones employed by the Banks are wringing
their hands portraying an implied crisis of deflation and stagnation
where the economy doesn't grow no matter what stimulus you apply,
including, printing billions of pounds, artificially propping up the
your own Bond market (IOUs placed against the assets you hold in the
country ) by buying your own paper with the money you just printed.
There was a time when growth was not worshiped on the high alter of finance.
Growth
was a constituent of industry and based of increasing the volume of
people you could sell your goods to which, in turn made you more
profitable, improving your image (if you were a public company) on the
Stock Market for investors to buy shares to share in the success of your
company. It was the basis of Capitalism.
Today we have an 'industry' which is separate from the normal industries which produce widgets.
An
industry which produces nothing, and rely on making a profit by
increasing the volume in the units of exchange (Money) and the
volatility of the transaction of this commodity which we measure our
wealth, "money".
It's called Investment Banking.
Some
of the best brains, fresh out of university work and contrive to build
schemes to ever increase the multiples which flow from a transaction,
extending the opportunities to which gambling, will distort and move the
currency (or it's hedged position) so that a bet on the position this
way or that will provide a profit and a corresponding loss for those
engaged.
Using
money as the main source of "economic activity" leads, as anyone will
agree who has extensively gambled, to an unstable life style with
unpredictable highs and lows such as we now experience in the financial
market.
The
bet has replaced the old rational based decision regarding stocks and
shares, a transparent balance sheet, allowed you to buy, long term in
support of a company producing actual things to trade and sell.
Will the fly walk higher or will it turn lower, what odds will you offer Mr Blankfein ?
Oh,
by the way, his compensation (I suppose compensation for him having to
leave home each morning) in 2007 was $53,965,418, so you might have to
wait in line for the profit to be adjudicated.
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