Monday, January 27, 2014

Financial Sarcasm Roundup for 01/27/14

The turmoil in global markets that began last week is wonderful news, from my perspective.  This means I can't afford to let up on the sarcasm directed against anyone who went all-in on any asset class this month.

Argentina is liberalizing its restrictions on foreign currency.  IMHO that signals the beginning of that country's hyperinflation end game but we're nowhere near the denouement.  Argentina would have to reduce the currency transaction tax to zero and allow other currencies as legal tender to truly end its crisis.  The Fernandez administration isn't ready to throw in the towel on its failed micromanagement of Argentinians' economic choices.  Argentina could have been a contender for world domination a century ago with its rich agricultural resources but its potential has been comatose since after World War II.  Maybe it's all the fault of the bizarre Peronist combination of incompatible ideologies.

Central bankers at the WEF in Davos are warning banks to quit playing games with rate benchmarks.  Global regulators are promising us even better benchmarks.  Well, sheesh, if they would have invited me to Davos I would have sold them on my idea for GIBOR as a benchmark.  These people need to appreciate my genius.  It's easy for banks subscribing to one benchmark to manipulate it, but a benchmark of benchmarks like GIBOR would be harder to peg.  I'm way more awesome than these global bank regulators.

The global elite confab is studying more than just rate benchmarks.  The Davos crowd sees broader risks in the emerging market sell-off.  They give themselves too much credit.  The crowd in the eye of the pyramid may be blind.  The biggest risk right now is the lack of confidence investors have in the transparency of markets and the trustworthiness of institutions.  The inability of elites to prosecute their own kind for financial malfeasance is the source of market distrust.  Solve that with prosecutions and trust will gradually reappear.

I have a couple of meetings this week in the San Francisco Bay Area with some business folks and an event to attend.  I'll let you all know what happens.  Alternatively, maybe I won't let you know what happens.