Hard to believe it’s coming up to the tenth anniversary of the formation of the pin. To start this, let’s deal with the generally held misconception about its birth. OW simply felt something was wrong. It wasn’t a reaction to AAM and Brendan’s attitude. It simply was that feeling and his and TUG’s effort that enabled this rather remarkable forum to exist.
OW (looks like Pierse Brosnan and a huge hit with the chicks) put a lot of effort into the place and created somewhat of a retreat for knowledgeable beings sick of the shite. And to that, he deserves a rather large toast. It probably saved a bunch of people a bunch of money. And contrary to the perma-bears reputation, a lot of the posters here seemed to do pretty good with their attitudes and are now homeowners having saved a shitload by ignoring the MSM. And very good luck to them.
I miss a lot of the posters that have gone away. TUG, Duplex and A Random Walk to name a few. To name everyone would be impossible.
Where are we though? A favourite investing newsletter of mine, the Absolute Return Letter, noted in January:
The main part of this month’s Absolute Return Letter will take a closer look at some of the stories that I think could dominate the financial newspapers in the months to come but, before I go there, I would like to make a few observations on the Global Financial Crisis (‘GFC’), which is now in its ninth year and still shows no signs of going away anytime soon.
To begin with, a brief note. You can hardly open a newspaper these days without some commentator looking to buy fame by attempting to predict the next crisis but, as I just pointed out, the last one isn’t over yet. Therefore a far more relevant question is: What is likely to be the next leg of the GFC?
The GFC began to unravel the world as we had come to know it in the summer of 2007, when a subprime crisis in Florida, California, Phoenix and Nevada began to unsettle investors. The first Wall St. victim was Bear Stearns, which ran into serious problems a full year before Lehman Brothers did. However, at this relatively early stage of the GFC, equity investors chose to largely ignore the brewing calamity. That overall attitude continued until the summer of 2008, when the seriousness of the situation began to sink in. It all peaked in the autumn of that year, when Lehman Brothers went bust. That is now widely known as the first leg of the GFC.
The European sovereign crisis is considered the second leg of the GFC. Ireland, Portugal, Spain, Italy and Greece all went through a horrid time but Greece more so than anyone else. It is probably fair to say that Greece is still years away from more settled conditions, even if it is widely recognised that the European sovereign crisis peaked in early 2012, when Greek 10-year government bonds yielded in excess of 40%.
Now the $64 million question: Do we expect a third leg to the GFC and, if so, what will it be? First things first. We do not subscribe to the-next-major-crisis-is-justaround-the-corner philosophy that so many do. Crises of the magnitude that we experienced with the onset of the GFC are extremely rare. We had one in the 1930s, and it took over 70 years for the next major one to unfold. Having said that, another leg to the GFC is an absolute possibility; I am almost tempted to call it a certainty. Major crises like the GFC do not go away quietly; some sort of end game will have to unfold first, and that hasn’t happened yet. World War II became a much needed end game to the Great Depression of the 1930s. Following over 15 years of economic uncertainty which was kicked off by hyper-inflation in Germany in the early 1920s, the world needed something to clear the air once and for all. World War II did precisely that, even if it came at an unpleasantly high price.
So we move onto China and the next wave of grand issuance of sovereign debt to patch up the cracks in a system that is fundamentally flawed. Anyhows, just some random thoughts and will update this thread as more cynicism appears...