The View From The Bridge

On the QT

It’s been a while and lots of ships have passed under the bridge, including an unnecessary election in the UK, the sacking of 12 White House staff members for various “misdemeanours” but mainly for disagreeing with he who must be obeyed, an interest rate rise in the US and the “successful” launch of yet another North Korean missile. There are sure to have been far more important items on the agenda, but the one constant has been the rise and rise of the US stock market. One thing that has changed and is unarguably the most important event so far this year is the central bank narrative. Before Bernanke became an ex master of the universe he opined that QE – quantitative easing – didn’t work in the way the Fed had and anticipated i.e. cheap and plentiful money would promote economic growth as businesses borrowed to expand their operations. They borrowed all right! To the tune of having a lot more debt than in 2008, now representing 45% of GDP. Not too shabby when compared with US government debt at “only” 100% but then they don’t have the distinct advantage of being able to print money. Whilst the cheap money regime continues corporate management will continue to borrow to fund share buy backs that cosmetically…

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The end of the beginning – July 8th 2016

“We are continually faced by great opportunities brilliantly disguised as insoluble problems”. Lee Iacocca Having been in Spain for the last fortnight I count myself lucky to have been away from the gnashing and wailing; and let’s be clear that I am not talking about the footie, a competition that has always been a disappointment for England (but let’s hear it for Wales) and, for me, a metaphor for the EU and all its secretive machinations that drive a coach and horses through the democratic process; witness this week’s quote from Francois Hollande, “the City, which thanks to the EU, was able to handle clearing operations for the eurozone, will not be able to do them,” he said. “It can serve as an example for those who seek the end of Europe … It can serve as a lesson.” At the end of the day the democratic decision of the British people is to leave the indubitably undemocratic EU; so how to grasp the great opportunity with which we have been presented? Trade agreements will of course be high on the agenda and the quicker this process starts the better. Comments from the more rabid EU bureaucrats, Juncker et al, suggest that some form of punishment is required “pour encourager les autres.” There is however something of a mellower tone from Germany where…