“Lame Duck” citizens and the global economy

In regards to our ‘global economy’, one is better off reading Dostoevsky’s The Gambler and saying to himself, “at the present moment I must repair to the roulette-table,” than listening to George Bush deluding himself about the fact that “while there is some uncertainty, the financial markets are strong and solid.” The truth is, our global markets have become a “lame duck” and all we can do is wait for the next disaster to shake the corrupt foundation on which things have been run.

As Hugues Rialan, managing director in charge of discretionary asset management at Robeco France puts it, “if they [financial institutions] had a much more transparent communication, we would not have all the bombshells, or rumors of bombshells, that we’re having today, with all the negative implications for the market.”

The fact remains that people are reluctant to utter the word depression, and therefore all we are left with are the words of all those experts who created the mess in the first place. Just before ending 2007, York professor Peter Spencer, chief economist for the ITEM Club, warned us; “I don’t think the central banks are going to make a major policy error, but if they do, this could make 1929 look like a walk in the park.” What has unraveled before our eyes since then, is a grim picture which threatens the very way in which we think of our ‘wonderful democratic societies’ and their ‘solid financial structures’.

We started 2008 with a series of announcements which should have shaken even the most faithful of believers in the goodness of our political and financial institutions. We recovered from our new year celebrations with legendary Wall Street guru and chief investment strategist of Pequot Capital Management, Byron Wien, telling us he expected oil to move between $80 and $115 a barrel, corn to rise to $6 a bushel, and gold to reach $1,000 an ounce. By the 7th of January, David Rosenberg, Merrill Lynch’s chief North American economist, was informing us that “according to our analysis, this [recession] isn’t even a forecast any more but is a present day reality.” More