A few days ago I read this cheery piece on Zerohedge. Although it recognises the likelihood of a compromise agreement being reached to avert the fiscal cliff, it also describes the dangers of a repeat of the brinkmanship of last summer, which destroyed confidence in markets.
The metaphor of running over the fiscal cliff being similar to a classic Wile E. Coyote plunge stuck with me (a mad dash over the edge, followed by a momentary pause before the inevitable plunge into oblivion). I started to wonder whether or not we are all living the same reality as the ill-fated Coyote, our legs pumping away, with nothing but a precipitous drop beneath us. Have we in fact already taken that sprint over the edge?
With this thought in mind I caught two news items from two of my favourite people in charge, Ben Bernanke and Christine Lagarde. The day before yesterday Lagarde was pleading for more time for Greece (because, yes, that is what they need, more time!) and today Bernanke has issued a robust (at least as robust as he ever gets) defence of his monetary policy (and, no, this policy is not designed to steal market share from the emerging nations through currency devaluation).
I’m actually getting quite bored of all this.
Week in week out we hear the same old lies, trotted out to make us feel secure in the knowledge that our leaders know best, they understand the crisis and are taking active steps to seek its speedy resolution.
Of course this is all nonsense.
None of them are prepared or capable, it seems, of taking the decisions that are necessary to bring this mess to a conclusion, so that real growth can start again. The paucity of leadership has been the defining element of the Credit Crisis. None of the measures have worked and, as it turns out, a debt crisis cannot be solved with more debt. Who knew?
So here we will stay, in limbo, sprinting as hard as we can, all the while knowing the bottom of a chasm awaits us.
(Even so I am still pretty bullish for the next few months. There may be a pullback but so many people seem to expect the fiscal cliff to bring about the end, it will almost certainly turn out to be a non-event).