Finalyst November 2013 Issue November 2013 | Page 8

FINALYST

NOVEMBER 2013

down policies and considerable an imprecise science made more 'boom' followed by a recession or
“gray” activities that are hard to complicated by the US Fed’s QE poli- depression. What’s the definition of
measure, not at least which is the cies which could sink the emerging insanity, it means doing the same
sprawling shadow banking sector markets. So does one get a déjà vu of thing over and over and expecting a
which is suffering from the predica- the Asian Financial Crisis 1997?
ment of over investment , seeds of
which were planted way back in the
housing bubble crisis of 2008, where
China appeared to dodge the global
financial meltdown by implementing
a huge half a trillion dollar stimulus
misdirected towards wasteful projects such as unneeded steel and aluminium plants.

different result every time, but can

However, every crisis contains within nature endure more and more peoitself the seeds of success and the ple going insane at the same time, it
roots of failure. Finding, cultivating becomes as Buffet says “systemic”
and harvesting that potential success like cancer , it’s global and malignant.
is the essence of crisis management Greed is good, but not God. We take
but it seems insurmountable in to- a buck we shoot it full of steroids and
day’s era of greed, where banks, in- we have a bubble, which are nothing
vestors are going bonkers over cheap but an in diffusible time bomb. The
credit and are ready to repeat the months ahead will be choppy. There

QE measures coupled with huge dol- same mistakes again. From the Tulip will be moments of panic when the
lar holdings transcend the financial Mania to Great Depression, to the markets will have to be calmed.
strength and it is about time that stagflation of the seventies, to the Most of us don’t know it yet but we
emerging market devised an escape. economic crisis caused by the hous- are the ninja generation, no jobs, no
Why not dollar holdings? Loading up ing bubble and Eurozone and now incomes, no assets, we got a lot to
on dollars helps Asia’s exporters by the bond bubble, every economic look forward to! So brace yourselves
holding down local currencies, but it downturn suffered by the developed ladies and gentleman, I wish you a
causes economic control problems. and the emerging markets can be merry crisis.
When central bank buys dollars, they traced to Federal Reserve policy. The
need to sell local currency, increasing Fed has followed a consistent policy
its availability and boosting the mon- of flooding the economy with easy
ey supply and inflation, so they sell money, leading to a misallocation of
bonds to mop up excess money. It’s resources and an artificial so called
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