Hello everyone!
This post will be a little bit different from what I usually write on this blog.
Recently I saw myself lose more money than usual because of political incompetence as of how the financial crisis is being addressed: the German ban on naked short-selling has been made public during regular U.S. trading hours (unlike U.S. reforms and bailouts that were introduced over the weekend). Volatility and (perhaps exaggerated) losses where generated because investors didn’t have the time to digest the news. Will the ban stop short-selling Europe? No! Have the fundamental financial issues in Europe been solved? No! Who is to blame for the current debt crisis? I think it’s politics and not investors, who otherwise, if politicians got their job done, wouldn’t have the reason to pick on Europe’s economy.
Germany has long profited from the Europe (exports to European countries have increased over time, those same countries cannot devaluate their domestic currencies any longer, production, living costs and borrowing rates are way lower in Germany, etc). But, as of now, German taxpayers have to come up with the money to save Europe and they want someone to blame for all the debt mess. The ban on naked short-selling represents just that: an irrational incomprehension of basic economic principles, unjustified public anger and a manipulation of facts as to push through with social and economic reforms. This of course came amid Angela Merkel postponing eventual bailout plans for Greece , two weeks ago, which only caused things to deteriorate.
This is only one example. I see all this regulation fanfare being utterly mislead. Even Goldman Sachs has been charged with fraud!! I mean, wasn’t the Clinton and Bush administration that forced mortgage lenders to loosen up a bit and start giving money to new homeowners? Goldman Sachs knew, perhaps more than others did, where things were headed and tried to make money out of it. It’s their job and they have the duty to do so to maximize shareholder value. If they are being accused of fraudulent behavior than there’s something wrong with how we all think of capitalism.
I think the current financial mess has been caused by senseless politics that cannot keep up with globalization: How could you ever be thinking to incorporate countries like Germany and others like Greece, Portugal, Italy under one common currency and one interest rate? Don’t misunderstand me: the European Union is a great thing, the Euro less, and I feel like the mentality of Europeans, their single governments, the reforms cannot keep pace with the utopic imaginations of some.
Most of us seem to forget how well off we where before the economic crisis. It’s the free markets: it goes up and then it goes down (sometimes a lot), but in the long-run, we all profit from it, and it gives everyone a chance. The current political reforms do not address the underlying issues, and are guiding us towards something we wouldn’t want if we understood what is exactly going on and weren’t being manipulated.
