The blogger is a serious follower of what is happening
across the world since his early years .
Apparently he seems anxious considering the latest
developments in the geopolitical and financial front which
according to him require additional cautiousness and disrupt of
our calmness practically on everything...
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The Swiss currency shock has raised an awkward question many investors have
been fearful of asking :
What if central banks become as unpredictable and fallible as they are
powerful ?
The Swiss National Bank's sudden decision to abandon its 3 year cap on the
franc - the cornerstone - of its monetary policy ,
led to the biggest one-day move in major exchange rates since
decades . To some it was a warning sign of other reversals , mishaps and
failures by central banks still ahead , a threat not fully appreciated by
long-becalmed markets .
For decades , the power of currency-printing presses has held markets in
thrall . " Don't fight the Fed , " and all its international variations , has
been a devout belief among financial traders .
Even after the failure of the FED under Alan Greenspan to spot and head off
one of the biggest credit booms and busts in history , the ability of the FED ,
Bank of England , Bank of Japan ,
ECB and others to flood their economies with money helped anaesthetize
fractious markets .
The subsequent waves of cheap credit , currency pegs and quantitative
easing drove down borrowing rates and erased volatility . The power of printing
money made speculation pointless . So much , so that one of the biggest
conundrums of recent years became the persistently low implied volatility in
markets even in the face of outsized economic , political and policy risks
.
The first cracks appeared last summer , when it became clear the FED was
turning off the printing presses even as its counterparts in Europe and Japan
were cranking up theirs .
The idea that the world's largest economy was about to suck dollars out of
the world economy just as others were pumping in
euros and yen sent exchange rates lurching .
The power of the central banks was as daunting as ever , but no longer such
a reassuring and calming influence .
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Recent thunderbolt from the Swiss Authorities went futher by calling into
question whether central banks are as commited to their policies as they are
purport to be .
Can for instance investors to be sure that bank of Denmark - facing a
similar problem - of holding a long-standing krone peg to a weakening euro -
will hold the line , as promissed ?
Or , will mr Draghi will hold firm to his announcement of pooring
more than a trillion euros in the coming 18 months to sustain the Eurozone
and stave off deflation ?
Will he even be there to see it through ?
************ ***********
So according to the blogger and many others , serious evolutions are
happening as we speak , taking world economies
out of their ADDICTION TO CHEAP MONEY which indeed looked
like a monetary METHADONE .....
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