The following post is a revision of a short letter that I sent out by e-mailed on Saturday, November 22, 2008.
At the time I wrote it, the VIX was at a 15 year high level …if not, indeed …at an all-time high.
See: investopedia for a definition of the index called …The VIX.
This look back, perhaps is more relavent today than it was then in terms of what world economies are now having to do in order to cope with their struggles to service their respective sovereign debts and debt loads which have greatly impacted their annual budgets …raising questions as to the stability of more than merely a few member of the Euro Zone.
This question of stability has and will continue to rock and ripple through global markets by reason of many interrelated felationships between sovereign debt and fiscal funding requirement …currency valuations not withstanding.
Furthermore, among the factors mentioned above …there are a good number of other factors whose weights are associated with debt, spending and taxation obligations …which must be juggled and ballanced symulteneously …in order to achieve a measured degree of reasonaly responsible fiscal accountability.
To this end, these issues beg the questons as to how to deliver social goods and services while also …at the same time reduce and or surgically eliminate domestic spending while.
The challenges to do all, efficiently and effectively at the same time …increase the notable level of challenge these measures of austerity represent to the E.U’s respective members.
Yet, as with any social system, to fail in anyway is to …fail in all ways for the problems facing any country riddled with debt demands that the prevention is as sizable as the cure. And the size and scope needed to adequately address, cope and turn the battle to the gate must be of an equl measure in order to alliviate the mess of the measure of their bebt.
Otherwise the problem today is the problem tomorrow’s with greater stresses and demands..
So swift, sharp and decisive powerful action is needed all the more rather than vascilation and the applications of bandaides.
I.E.: It is no longer satisfactory to treat the symptom. Now is the time to work togeth to cure the patient.
Unified in agreement, we must stand to work together.
Taking the osterich approach in “WHATEVER” is no longer a healthy global option …let alone one worthy of resolve on a more domestic sovereign stage.
Never the less, the determination must start at home in erest before standardizeation and continuity are to be reached for as viable options to impliment on a more broader scale.
And we have to realize that we no longer can ill-afford to; “…have your cake and eat it too …”
Certainly, these difficult tasks conflict more and more withn the frameworks of a social system …one in which a more European public mind-set is historically conditoned …one which became strongly dependant upon looking to the government to deliever publicly chartered, socially mandated, obligatory goods, services and easy hand-out-like solutions.
One needs only look to the riots in Greece to realize what impact austerity has upon a socially conditioned mind-set.
Spare the rod and see what happens to a spoiled child …uh huh.
Yet, austere measures add to the challenge the questions as to how a socialist form of government can deal with its debt issues …while maintaing a grip on the means to coax their economies back to healthy recovery.
So, today in view of the change in leadership in our House of Representatives …I choose to go back into my archives …particularly because, we here in America …have an increasingly wonderful and new opportunity to embrace the new Speaker of the House Mr. John Boehner John Boehner – 8th District of Ohio in all the potential of promise which Mr. Boehner’s acceptance speach holds for America.
For, if he is indeed a man of his words …and I truly believe that he is all that and more; America is now on a track to a more certain properity.
As Representative Boehner declared strongly …he made spending cuts an express matter of America’s top priority.
This primary expression is a credible real opportunity which is cause for cheer and hope in that it brings to the forefront of the national conversation …for the first time …in a long time …the preimenence of an order for a matter of urgent priority …the order of spending cuts …not merely paultry reduced soending.
Mr. Boehner’s deliberate choice characterize this single matter in a recognition of its detrimental nature …and thus, Mr. Speaker declared spending cuts America’s number one matter of extreme urgency.
Therefore, it is refreshingly fitting that his game plan also receive its due recognition as an urgent priority …a plan, which …when placed in motion …will have the wieght, and the substance to produce massive …badly needed inertia.
And this is the sort of potential power …by a measure of which will posses the kenetic energy nesessary to lift heavy burdens off the shoulders of “…We the People …” possibly for the first time in perhaps …over thirty years.
Prosperity is on the way in this sort of game plan people.
And although spending cuts are not an end-all means by allbeit by itself; it is none-the-less …a good front end beginning from which and with which to compliment an approach of a whole host of other private sector incentives.
Public solutions …we just can not afford …nor the time which we have already squandered.
Such private sector combinations …are those solutions which will fill the nation’s tax coffers with needed tax revenue …not generated by debt sources …but by fertile domestic rich resources …organicly derived from an economicly revived incentivized economy.
This kind of approach is full of promise …in ways and means to organically produce hightened economic velocity …robustly grown and aided by offering a cultivated fertile ground …prepared with the fertilzer of favor which efficiently stimulates gowth environments with ecouragement rather than penalty.
In order to grow the economy …the mentality of any sucessful environment condusive of growth …is one which understands the values of attitude and principals of patience …those requiring time between when one sows and the season when one reaps.
Make no doubt, there are cycles and seasons in such.
But they are according to an order which has a priority in a time-honored purpose.
Therefore, make no mistake about the priority of what is esteemed in this order which involves patience and perserverance; in that …he which sows debt …shall reap also sparingly …in that debt, and he which sows bountifully …being a cheerful sower …doing so without necessity …and without obligation (in and with an understanding of incentive) …he shall reap also bountifully.
So let us give by sowing …by planting our seed into our fertile life-giving domestic field’s …into prepared soil …our seeds …seeds which produces return domestically …rather than reward our creditors abroad …those who have been lining up to strip us of ours …an otherwise rightful prosperity and the abundance of all our necessity.
To Speaker Boehner I say; Be not weary in well in well doing Sir, for we know that in due season …we shall reap …if we faint not.
…good measure …press down …shaken together and running over shall men give unto your bossom …
Take heart and enjoy the following look back to November 2008 ….and faint not!!!
Written: November 22, 2008 …partially revised January 06, 2011
How do you take advantage of the following here-to-fore unprecedented out of phase global economic cycles? Check out the following hypothetical scenario in which the actual question might be more aptly worded; “…How do you avoid becoming crushed by the affects of this out of phase cyclical phenomenon?
Let me set the stage, but let me say first …I am really concerned for the well being of our sovereignty.
The scenario is an international story. And it’s a global play.
Are we not, domestically …well into a recessionary cycle …well ahead of most all the other world economies? Sure we are!
Remember when we (Greenspan) were (was) lowering rates over a considerable period of time during which the rest of our global partners were raising theirs?
Remember oil prices during this time …rising to + $ 155 per barrel?
Now, consider the continuing flight to safety argument in which I mentioned to you last week. Its premises revolved around the ongoing continued flight to safety. This is part of our evolving global environment.
The argument’s central premise was centered around the plays that the other central banks and other institutional players may be intentionally making to strategically set up the potential to leverage …sometime in the future …their well positioned early moves into a stable dollar …before yields rise and strengthen the dollar against other foreign currencies.
My argument posed the question as to whether or not this play was made by reason of a flight to safety as compared to one …a gambit which intentionally made the move into the U.S. dollar a speculative move …one which is anticipating a future exit strategy to be triggered in some future time in which anticipates a strengthening of the dollar.
Well, now that the stage is set, ask yourself what these global players stand to gain in view of the fact that the two sets of global recessionary trends are (still?) mutually out of phase with one another.
In other words, when we do actually find the necessary (political …and or monetary) will to move rates higher to counter inflation, the strength of the dollar might just give these global players a relatively stronger case and reason to head for the exit …taking an anticipated, more opportune …more calculated …more attractive impulse to flee and to jump ship abandoning the dollar in favor of other markets and other currency plays …when the time and price is right.
This would be dependant upon …I would think …the relative strength of the respective spreads between any number of a variety of other currencies
Regardless, there is only so much one can do to make a sinking ship attractive to rats these days. Even printing money has its draw backs from a more domestic political perspective …the will of the public electorate not withstanding.
Never the less …try and put on your long-range thinking cap and shades …you know …the ones that give you a view of the pros and cons of a weak dollar vs. a strong dollar argument.
Try and get your head around this historic unprecedented flight to safety in terms the shear magnitude of the gargantuan size of this influx. Now, consider the affects of any outflow …the flux of which …howbeit ever so small a change such an event this might be.
After all …when treasury related debt instruments are sold to foreign creditors …there comes a time when these bills come due or are called, turned and or cashed out and redeemed.
Add to this perspective, the global fluctuations of a balancing of the in flow and outflow of foreign currencies and you may be seeing the sort of global speculation that is now just one component and one aspect of what is being called …flight to safety.
My comment poses an argument which asks the question whether or not …flight to safety is actually just another oxymoron …waiting to happen …one which may …more likely add to the need to raise the debt ceiling at a time when that is not in our best interest to do so.
But what other choice do we have. We have all but painted ourselves into a corner-like monetary quandary because we lack the will to tackle fiscal responsibility in all of the generic sense of what it would take for the private sector to grow us (in terms of real tax revenues) in terms of sheer economic velocity out of the doll drums of our economic ho-hum slump’s debt-riddled rut.
I wonder how this aspect of the global economy’s state of flux …how its motion might compare to how the recent hedge fund redemption activities which have raised the VIX to such high levels of volatility.
After all, we are where we are because of our addiction to and reliance upon unhealthy plays involving excessive debt.
Is this valid? Is it worth consideration or what?
Do you have any in your organization who might be able to weigh in on this?
All the best,