Answer This!
By Chris at www.CapitalistExploits.at
I’ve been inundated with questions from many of you following the recent events. Brexit, that is, not Justin Timbertrouser’s latest antics. While I can’t publish all of them, I’ve selected what I think are some of the most important ones.
A lot of questions were related to positioning during and post Brexit. I hate to mention it as I may choose to trade out of whatever I mention at any given moment so please bare that in mind.
- Sold a bit of GLD on Thursday and will look to buy back after the shock/euphoria subsides.
- Long GBP/EUR and USD/EUR.
- Net short equities.
- Lightened up by 25% on short Spanish 10-year and long US 10-year. (hint: you get paid to do it and are synthetically short EUR which I’m OK with).
Ok, onto the questions…
“By the way, your latest article ” World out of whack” was great. I believe the next crisis country will be Italy with their massive banking problems. The Euro is simply too strong for them and in the old days they were able to compete against Germany by constantly depreciating the Lira.
Best,
H.”
Excellent points on the historical situation with Germany and Italy, and pinpointing the currency aspect.
Not everyone agreed with Italy as it came in a close second to France, as you can see below from the poll I ran in the recent World Out Of Whack.
We’re actually dealing with two drifferent problems here – the EU and the currency. Let’s take a closer look at both.
The EU was originally designed to stop Europeans killing each other (something they’ve been doing for centuries) and to foster closer ties between European countries by eliminating barriers to trade. As the old adage goes, “When goods don’t flow, bullets do.” And this was at the core of the EU idea.
Giuseppe always loved BMWs, didn’t care for sauerkraut (I don’t blame him), and – while being infuriated with Hans who is as punctual as Big Ben – saw no reason not to make the buying of his BMW any easier.
Hans, on the other hand, still believed that all Italian woman were smoking hot, all Italian men were plumbers, and though he couldn’t understand how pasta could be eaten everyday without causing some sort of digestive problem, he welcomed the idea of shooting down to Puglia for a weekend’s sun – sans silly visa requirements.
So why not allow Hans and Giuseppe to manage all this with less friction?
Increasingly though, the EU has become a barrier to trade rather than an enabler. Today there are restrictions and laws governing how bendy a banana must be. Not bendy enough and it doesn’t meet regulation. Cucumbers can’t be too bendy, on the other hand. Not straight enough and they too are in the tip.
Then there is the famous case of the EU directive stating that water does in fact NOT hydrate you. Retailers of water were banned from suggesting water would in fact hydrate you.
Prunes are not laxatives (contrary to …read more
Source: Answer This!
