Saturday, September 03, 2011

The consequences of sheepdogs biting sheep

If world governments do not take pre-emptive action this weekend, or by Monday morning at the latest, as the US is closed on Monday, expect Japan and the rest of Asia (with probably least impact on India) to take the first hit, and then expect Europe to be hit once that opens.

All currencies will fall relative to the USD. On Tuesday, when the US opens for business, expect the USD to strengthen further.

However, expect shares to tank right around the world. Expect commodities (excluding gold) to be hit.

Though bonds should strengthen, we are starting what will be the worst phase so far of the crisis which commenced in 2007.

Politicians have the responsibility to announce as soon as possible what steps they are going to take to address this.

Pray hard, and do everything in your power to keep attention away from nationalisations and from protectionism, and focus on promoting world trade and world growth - preferably in ways that strengthen care for the environment and for the poorest - who will, as usual, be hardest hit.
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