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Patrick L Young Newsletter The Frontier Financier - Prologue

 

Prologue

 

003

The Fog of The Double Dip

 

"The fundamental lesson is that volcanic eruptions will continue to happen in Iceland so we'll all have to learn to live with them and handle them better. We should treat the events of the last few days as a dress rehearsal for what needs to be done if and when Katla erupts. There really need to be extensive plans to deal with these eruptions so that we don't see this sort of chaos and bewilderment and surprise again."

 - Olafur Grimsson, President of Iceland.

"Many of the worst disasters in history started quite modestly. One accident led to another, until a fault line opened up in a civilization."
- Amanda Ripley "The Unthinkable"


Dear <<First Name>>,

Picture the scene: almost every newspaper in the past fortnight contained photographs of their nationals stranded somewhere in the world, unable to get home. The British in particular, caught unawares during school holidays, were frequently pleading poverty, their credit cards stretched to the max, asking the government to bail them out. While it is difficult not to sympathize with the stranded - your correspondent was amongst them - it is a worrisome curiosity of the modern world that ordinary voters seem to think their government has the resources to help get them home.

The volcanic eruption of Mount Unpronounceable dominated headlines to the point of inspiring some manic conspiracy theories about the wrath of Icelandic Gods venting their spleen over the fiscal bullying of Iceland by Britain, Holland et al. Lots of numbers have been glibly trotted out by the usual 'glib-trotters.' Clearly various sectors of the economy have lost a billion here and a billion or two there. It seems plausible to presume that all these lost billions now amount to 'real money.' That flights have taken off again molests not our economic forecasts because in the past week hideous damage has been wrought upon the fabric of the fragile government-sponsored recovery.

A single eruption may prove insufficient to kill the recovery but it certainly does not help. Any further 'modest' incident (volcanic or not) will ensure we tip into a stinker of a double dip. When Krakatoa exploded in 1883, it was five years before global temperatures rose back to the norm. This effect was catastrophic on agricultural yields world-wide - fortunately it did not affect air traffic control that time. The cataclysmic explosion of Mount Tambora in 1815 destroyed crops in, amongst other regions, much of Europe, America and China. As the volcanic clouds circled the earth, it was referred to as "the year without summer' - a conservative description for what was actually a year long winter: Connecticut was just one state blanketed with mid-summer frost: on June 4th 1816! Riots were prevalent throughout Europe. Around 100,000 Irish starved to death alone and of course grain prices went through the roof. The economic contraction was almost unimaginably sharp. Crop failure provoked by frost and heavy rain as well as the lack of sunlight was widespread. Incidentally, every time Eyjafjallajökull has erupted for the past millennium, it has been followed by the much larger Katla volcano which has anyway tended to erupt twice every century for the past 1000 years. It last definitely erupted in 1918, although some claim it had a minor eruption in 1955.

The 'disaster' of the big fog was not Dickie and Doris stranded on the Cote D'Azur or Marbella. The problem is that the world has reached its credit limit and has nothing to spare for a rainy (or foggy) day. Meanwhile, the Greek government has abandoned its untenable bleating blame-storming balderdash stance and called in the cavalry but this is indeed as OECD boss Angel Gurria notes, contagion spreading like a financial Ebola. Just as Iceland's President notes the poor (non-existent) planning for volcanic disruption, the truth is the Eurozone has not truly prepared itself for any crises. While other countries teeter on the brink of a liquidity crisis, ironically politicians seem keener on restricting the core insurance indicators pinpointing profligate government as opposed to putting their houses in order. Government is trying to do business as usual as part of its denial of the economic and debt picture.

Ultimately, given that government too has maxxed out on their credit lines, it is perhaps fitting that the economy has probably peaked for the time being in a mass of sulfurous fog. Greece looks likely to push us over the precipice even before Katla has a chance to "speak."

Best wishes,

Patrick

Patrick L Young
patrick@derivativesvision.com


 


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It’s summer so I am at home in Monaco but thanks to a lack of political leadership in Europe, there have been ample opportunities to speak with the media. For my most recent videos from RT News channel, have a look on my newly revamped web site: www.patricklyoung.net.
 
Various projects are in the works currently with more news to come!

In the Media



Current Projects

I'm hard at work on the final edits of a book for charity with contributions from a welter of serious hedge fund maangers, analysts and pundits...more news to follow soon!

Several new start-up exchange ventures are on my desk while various publsihing ventures are also nearing fruition!


Travel Plans

Various destinations in Europe likely during September including London.

About This Newsletter

Patrick L Young is the author of several financial market books such as "Capital Market Revolution!" and

"The Exchange Manifesto" His Op Eds have been published in most of the world's leading financial media such as the Financial Times and Wall Street Journal while he has appeared frequently on BBC,CNBC, CNN and other digital media throughout the world.

My expertise is, (in no particular order!) exchanges, derivatives, market infrastructure and financial centres, as well as emerging markets. I can claim modest provenance as an early adopter on the web, having published various online magazines along with other WWW ventures since 1995. Nowadays I enjoy a varied portfolio of advisory work (most notably for investors in exchanges) but along the way I have done just about everything from multiple financial start-ups through to advising government and other stakeholders in financial centres the world over. I also indulge in some  entrepreneurial projects too. After more than 20 years in finance some folk might think I am due a spot of remission for good behaviour. I think it is clear from this bulletin, my passion for markets remains as keen as ever!

 

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