{"id":1091,"date":"2011-08-07T15:17:26","date_gmt":"2011-08-07T13:17:26","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=1091"},"modified":"2011-08-07T15:17:26","modified_gmt":"2011-08-07T13:17:26","slug":"el-incomprendido-mr-market","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/el-incomprendido-mr-market\/","title":{"rendered":"The misunderstood Mr. Market"},"content":{"rendered":"

\"\"Nearly two years ago we wrote an article entitled \u00abEconomy and Politics<\/a>\u00abThe video showed various videos of trade union leaders and economists. Obviously their speeches were and are not only opposites, but they actually spoke different languages. They are in fact different animals. Their divergences become even more evident and lethal when the situation of the global economy and finance deteriorates, i.e. when their rapport and harmony is most needed. But they do not. The greater the systemic risk, economic deterioration and global complexity, the more governments need to act expeditiously, the more inoperative their policy decisions become. And markets need deeds and not words in these delicate times, firm and courageous action. However, politicians can only offer, as we are currently seeing, empty words, good intentions and populist decisions that keep them in power, inoperative but power nonetheless.
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And not only have we seen inoperativeness in the EU since divergence and default began the road of no return, but we have also seen it recently in the US Congress. The absence of an expeditious agreement between Democrats and Republicans to solve the debt ceiling of the world's leading power has hurt Mr. Market more than his own macroeconomic figures. Because the data are not as negative as the market is quoting. The average price of the companies in its main indices is moderate, corporate results are solid, and even the labour market itself is recovering. However, with the same weakness as in the previous exit from recession in 2001, as we can see in the following graph. No more, but no less either.<\/p>\n

\"\"<\/p>\n

Ezra Klein<\/a>, The Washington Post's Mr. Market claims that the market is not being affected by increased spending or the deficit going unchecked. Not even because stimulus policy in the US has changed with the end of QE2. Mr. Market resents the inability and inoperativeness of US congressmen to even comprehend the scope of what they have on their hands. Once again, because of the gulf that separates animals of such different species: Do you know how many parliamentarians in Brussels or Madrid are capable of understanding (let alone governing) the intricacies of global economics and finance? How many of them have sufficient academic training to correctly interpret economic events? I fear that the percentage is minimal, and moreover such knowledge is essentially incompatible with the skills needed to progress in a political career. Economics and finance, especially in times as difficult as these, entail unpopular decisions. And it is precisely the opposite that political success, as we misunderstand it, depends on. Unfortunately, our politicians, both nationally and locally, are far from being able to properly interpret the New Normal. They were not even able to understand the Old Normal.<\/p>\n

The exit from the recession tunnel is still very unclear. Quantitative easing in phases 1 and 2 seem to have been insufficient to adequately boost the US economy. And perhaps it was foolhardy to orchestrate a Q3. For our part, we in the EU are torn between to be or not to be. Between chain collapse, uncontrolled break-up or a QE1, which is the dark and covert path that has begun with the ECB's officially unconfessed purchase of debt, while Merkel distracts her electorate as best she can. Japan is struggling to get back on its feet because of its uneven struggle against the elements and its bubbly past. Emerging and emerging markets are weighed down by the falling consumption of an occiedent with a horse-drawn recession. And the People's Republic of China, despite its ability to make unpopular decisions and plan its economy, faces an uncertain landing.<\/p>\n

Meanwhile, the complexity of the scenario increases day by day. But politicians do not understand or see beyond their own language. Neither the US congressional countdown, nor the Eurozone bureaucrats, with Merkel and Obama in pre-election campaign mode, are able to do anything more than dither. And Mr Market is waiting more and more impatiently for words to be turned into deeds.<\/p>\n

\"\"<\/p>\n

Mr. Market's spasms and syncopated movements are symptoms of the incomprehension and neglect that economies suffer from their rulers. Because the last thing the world economy needs are popular decisions. Decisions that are intended to save a social welfare that unfortunately we can no longer afford. It would not even be prudent to take certain expeditious decisions in the light of day, because they are unpopular.<\/p>\n

However, expeditious actions are covered up. alegal<\/em> or illegal activities aimed more at saving establishments<\/em> or certain heads than to solve problems. For example, the repeated purchase of sovereign bonds by the ECB from countries that the market no longer finances, when current legislation has never contemplated this. Nor is it in the politicians' interest to air the admission of surreal and obvious accounting manipulations, or the official and lamentable cover-up of the Greek default, etc, etc. Anything but taking the bull by the horns.<\/p>\n

Instead, what we have before us are imminent election campaigns as vital as Obama's or Merkel's, and less so in Spain. Populist processes that will further distance politicians and their decision-making from what economies need to recover and markets need to heal their wounds.<\/p>\n

Instead of claiming that tonight the sun will rise<\/a><\/em>, Perhaps it would be better if we tried to get a good night's rest so that we can work harder than ever in the morning. Unfair, yes. Necessary, too.<\/p>","protected":false},"excerpt":{"rendered":"

Hace casi dos a\u00f1os escribimos un art\u00edculo titulado \u00abEconom\u00eda y Pol\u00edtica\u00ab, en el que se ve\u00edan diversos videos de l\u00edderes sindicales y economistas. Obviamente sus discursos no s\u00f3lo eran y son opuestos, sino que en realidad hablaban idiomas distintos. Son de hecho animales distintos. Sus divergencias se hacen a\u00fan m\u00e1s evidentes y letales cuando la […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[38,41,37],"tags":[],"class_list":["post-1091","post","type-post","status-publish","format-standard","hentry","category-actualidad","category-economia-y-finanzas","category-reflexion"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/1091","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=1091"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/1091\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=1091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=1091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=1091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}