Move over darling
Oct 8th, 2008 by Bert
The markets are grim this morning - Alistair Darling perhaps predictably has failed to calm the storm. I have a lot of sympathy for his approach - he’s been panned for taking too long to make up his mind but he needed time to assess the situation properly. Almost all of the journalistic comment I’ve read so far has been negative - too little too late - but most of this opinion is heavily inflenced by the comments of bankers who may feel that the chancellor has hung them out to dry.
I’ve never been a fan of Darling’s - it might be the way he looks, the way he talks or even just his name - but for some reason he gives me the creeps. I respect him more today for refusing to be rushed into a quick decision. Darling is like an African hunter standing in front of a charging rhino knowing he only has one shot - he’s waited as long as he dared and now he’s fired. I wish he had more gravitas though - getting the package right is one thing, but in addition to providing financial support it has to change people’s behaviour. We really need a chancellor who can instil confidence - a man who can deliver the package and then come out and defend it, convincing the investment world that he understands what is going on and is on top of it. Darling, cagey and defensive as he is, is not big enough for the job.
Step forward then the PM, a financial man who did have the right sort of gravitas in the days when he was doing the job. He must have played a major part in all of this - it’s surprising that he isn’t pushing himself forward more prominently. This could be the miracle that saves his career if he plays his cards right, just as the Falklands war delivered Thatcher home all those years ago. Today then is a huge day for the Labour party - if the markets stall in the sell off and the FTSE bounces then the package looks like a success. If it gets swept aside then they look like failures.
I used to be a trader and I would spend loads of time each day looking at charts. In the back of my mind I have a big concern - the FTSE peaked at around 7,000 in 2000 and then nose dived spectacularly to hit 3,500 in 2003. It then staged an amazing recovery, nearly hitting 7,000 again in 2007. This is a very real crash underpinned by major financial concerns - the natural behaviour looks to be to test the low of 2003 again, which unfortunately is over 800 points down from where we are now. I sincerely hope we don’t go down there.
Enough tittle-tattle. I see that Weather Front, a horse I tried to buy a while back runs today. He has a tough task on conceding weight all round in his first run for a new stable, but he was a nice type who looked progressive. I may back him small if I can drag myself away from watching the markets. Skid Solo runs tomorrow, and must have a great chance. Major Eazy should make his long awaited comeback on Saturday in a group 3.
6 Responses to “Move over darling”
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Under the stewardship of Chancellor Gordon Brown he took office when the books were in a very healthy state. He systematically drained away so much money that he relied on the ocean of debt building up in mortgages and other borrowings to keep the economy afloat on the sea. Not only that, this whizz-kid financial genius sold off much of our gold reserves at a ridiculously low price compared to the price today. Some genius!
Sorry Bert, Gordon Brown has been blinkered throughout, or deliberately throwing the race. Poor old Ali Darling has ALWAYS been the whipping boy of the party. He gets “promoted” into cabinet jobs that nobody in their right mind would accept. I feel quite sorry for him too, but nobody in government will solve this problem. The markets will eventually recover through market forces. (All in my inexpert opinion of course!)
Could be worse “Bert”. If the Betfair CEO was running the country, your tax bill might have just gone up by 400%. :-).
I think there is still worse to come. Initial numbers from funds of funds indicate anything between 15 and 50 percent of hedge funds’ assets under management will have to be redeemed in q4.
If I was long EM equities or currencies, I’d be pretty worried. Ceteris paribus these markets will get lower and more disorderly.
It is also hard to see developed economies’ equity markets rallying meaningfully given this and 3500-3550 may well be possible in the FTSE.
Volatility is at all time highs, but since ‘once in a lifetime’ events are occuring daily, it’s actually still cheap.
Philip,
I’m not a supporter of GB on the whole (I don’t have any strong political views these days) but for right or wrong I think he’s a better salesman than Darling, and the Government needs to sell its solution hard and well to maximise its impact.
TG,
400% - is that wishful thinking ?
shoreditch,
thankyou for your perspective. There will be short positions to unwind as well and the government injection yesterday will help in all of this. Calls for another post.
Apologies for that one Bert.
Stock markets up this morning so Brown/Darling Plan and co-ordinated interest rate cuts seem to be going down well, at least in the short-term.
I was trying to be fairly specific in that, despite recent falls Emerging Market equity and currencies remain a sell - HFs have seen unprecedented redemptions and these markets are simply not equipped to deal with the size of liquidations that are going to hit every day from now till year end. Expect these equity markets to shut down completely and exchange controls to be implemented.
G10 and developed equity markets I think broadly the same, there will be large liquidations but you will get rallies to sell into on days of positive news. On days of bad or no news - same amount to be sold but expect equity markets doing 5% or more on these days to the downside.
It is not beyond the realms of possibility for authorities to simply shut down stock exchanges etc in the developed world although it would have been unthinkable in the past.
I’m not really that bearish but I don’t see any alternatives given that 8 years worth of global growth trades will have to be liquidated in 90 days