Two important lessons one can easily learn from the history books, if one is that way inlined.
1) Beware of governments claiming to have reassured the markets.
2) Sistemic flare-ups like wars, revolutions and banking crises often sport an apparently singular trigger event. Yet these are no more the ‘cause’ of the eruption than Archduke Ferdinand’s assassination caused WWI.
These moments simply make unavoidable something which was already there before, but was being avoided.
“Gradually, then suddenly,“ as Hemingway put it.
1 comment:
Zero and negative interest rates were always going to cause a major problem when they ended. What does one do with bonds that pay nothing when there are bonds being sold that actually have coupons to cash? Then you add in the dichotomy of long date obligation and the demand for liquidity by the short term savers who are buying the bits and pieces of the long term obligations. I was surprised it took so long to come to a head.
The venture capital nonsense is next...
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