Politics, Markets, and People: On a Collision Course

Tuesday, April 24, 2012
By Paul Martin


The world is clearly on a collision path, ideologically, economically, and philosophically. And the markets are starting to reflect this.

The story of the weekend is Wal-Mart’s bribery scandal. But Europe is about to head on another down leg as Spain’s economy is shrinking and the European Central Bank is not interested in another round of money printing or bond buying. As we reported last week, European banks are already running out of the money that was put in their pockets by the LTRO bond buying arrangement with the ECB. So Monday is a major potential disaster about to happen.

Should anyone be suprised? Is Wal-Mart a company who would be above bribery? Did the LTRO really fix Europe’s problems? And does anyone really believe that you can fool all of the people all of the time? The answer is clearly no on all three questions. So what we’re seeing this morning is just another rung on the stairway of an adjustment process toward some kind of new baseline. The so called “new normal” is, in our opinion, a dynamic process, not a static one.

Think about this for a moment. The U.S. bailed out General Motors after its management team and its labor unions gutted the company. GM is once again profitable. So how does it deploy its new expansion agenda? It plans to open 600 new dealerships in China. Why can’t they use that money to develop, manufacture and sell new cars in the U.S.? Because there is no sense of right or wrong. Gratitude and payback are not part of the vernacular anymore. It’s all about quick profits and moving to the hot spot of the moment without learning the lessons of the past.

The Rest…HERE

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