Prepare yourselves. I'm about to spew more bile on the business world. Here we go.
One Eurocrat wants to outlaw Libor manipulation in the wake of revelations from Barclays et alia that they were playing games with interest rates to avoid going bankrupt. Outlawing interest rate manipulation by bankers would be kind of like outlawing the breathing of air. It's what bankers do. It's such a natural state of affairs that central bankers give it a wink and a nod. Here's a better idea: Instead of restricting Libor's bidding process, make it transparent by putting in on the European Central Bank's website in real time. That way no one's in the dark.
Europe has more to worry about than fallout from this Libor debacle, like how to pay bondholders while sticking it to their taxpayers. A bunch of Continental ministers are going to meet one more time to pretend to solve their countries' insolvency woes. I think they just get together for the great food and champagne, and to reminisce about past World Economic Forum junkets where Bono hectored them on economic development. Germany knows that Spain and Italy can't afford to raise more debt but they don't want any net importing countries kicked out of the euro. That's Germany's problem in a nutshell, and that's why every German politician of note has been using double-talk to stall for time. The "Davos culture" of transcontinental elitism may survive in salon format but its inability to solve real world problems makes me wonder whether it's worth going that far just to eat steamed lobster.
Meanwhile, here in America, things are also going down the tubes. The Administration wants to extend tax cuts for the bottom 99%. That's okay but I wish it could be accompanied by serious tax code simplification. It's smart politics to get this out of the way now so raising the debt ceiling doesn't get hung up by Election Day. What's not okay is that corporate earnings are about to get a lot worse if pre-release guidance is accurate. This isn't just the usual CFO parlor game of lowering expectations just to beat Wall Street's estimates. There are real headwinds now from slowing European growth, Chinese inflation, and anemic job growth here in the U.S. I don't pay attention to Wall Street analysts anyway but they should pay attention to me.
Finally, Dr. Doom weighs in on the approaching perfect storm. This storm has been brewing through decades of debt-induced overspending, infrastructure malinvestment, and unsustainable middle-class entitlements. I say bring it on. My Alpha-D portfolio can navigate the mightiest of macroeconomic winds, unlike the asset allocations of many whiz-kid hedge funds that will probably be wiped out. Many fortunes were made in the first Great Depression by people who stayed solvent and bought at the bottom.
Have a nice day! :-)
