This week brings the Moscow circus to the world stage. The world’s major economies meet in Moscow as the Russians are presently in the leadership position of the G-20′s rotating presidency. It used to be the G-7 nations that crafted an economic blueprint for the World Bank and IMF to somewhat adhere, but as much of the global economic growth is now in the BRICS and the other emerging economies, the world’s former colonial powers have had to make room for the rising economic nations. Most of the time the G-7 and G-20 meetings have been photo-ops for world leaders, but every once in a great while something constructive actually makes its way into global policy. The immediate global consensus after the Lehman debacle helped stem the global credit markets from total collapse. This G-20 meeting will not be one of the constructive outcomes as the G-20 members are nowhere near any type of consensus.
Posts Tagged ‘Philipp Hildebrand’
One of the most important elements to the purpose of the financial markets is to be an indicator of flawed policy. If money is too loose, the BOND VIGILANTES will assure policy makers that it is time to tighten by pressuring BOND YIELDS higher. As Bill Clinton’s attack dogJames Carville so elegantly stated: “I want to be reincarnated as the bond market because it intimidates everyone.” The huge FED QE PROGRAM has temporarily castrated the BOND market as FED INTERVENTION means that the BOND VIGILANTES lack the fortitude to signal the markets. Even the EUROPEANS have momentarily silenced the market by the huge liquidity pump via the LTRO program with another LTRO coming at the end of February.
A few stories from Russia today. First, the Russian Judicial System rendered a totalitarian decision as the oligarch Khodorkovsky was again found guilty of some type of misappropriation of funds when he controlled YUKOS, the Russian energy giant. This is another black eye for the RULE OF LAW in Russia as the verdict appeared to be predetermined with the heavy influence of Prime Minister Putin. I don’t doubt for a moment the tragic shortage of justice in Russia, but the question is: Do the markets truly care, or as I continually remind, is MONEY FASCIST? Global investors will set aside criticism of a nation’s societal and legal injustices if the investment returns are high enough and the government is stable.