Sunday, January 24, 2016

The economic system worldwide is a total shambles thanks to central bankers and governments who think they can print away their problems and 2008 never happened. Now the under the counter QE will be joined by QE4 and then its off to hyperinflation as all the bankrupt banks and companies who pay their workers peanuts have to be saved because they cannot survive in the world they created. A total and utter shambles...I'm never sure why there is so much concern about liquidity or lack of it in fixed income or equity markets. If investors want to sell something that they own, they can only sell it at the price that another investor is prepared to pay for it. If that price is lower than the price someone else was prepared to pay a month ago, or a week ago, or if the price is less than the seller was hoping to achieve, so be it. It's not the end of the world. They can decide not to sell at the lower price and hold on to their asset, or they can bite the bullet and sell.  Bonds and shares are designed to be long term investments. There is no fundamental right for an investor to redeem that investment whenever it suits him. If he wants out of the investment, he has to sell it and he can only sell it to someone else who wants to buy it - at a price that person wants to buy it at.  Why are so many people getting worked up about this?...The EU has legislated a mechanism to prevent a bank crash, it is based on the Cyprus model and amounts to using your money as the bank's assets.  "You see, when you open an account with a bank, you are investing in that bank". As someone who has owned bank shares and bank bonds, that is news to me, but, the rules are there to be changed at will by the people with the power to do so, and they have. The statement above indicates that your money is just as likely to be misappropriated sitting in a bank as it is if it were under your mattress.  It might be prudent to move your money into a Mutual or if a small amount, take it out and stick it under the garden shed or something.

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