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VeryMeanReversion

The Bailout Hierachy

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First, the smallest and weakest banks were bailed out and absorbed by the large banks

Then the largest banks were bailed out by the governments

Then the governments were bailed out by their central banks (QE)

Then Europe attempted to bail out a European state using vague words and the IMF but this has been stopped by the US and it's basically a dead-end.

So we have apparently reached the top of the bailout hierachy without solving anything so where next?

Well there is only one stage left in the bailout hierachy and that is the taxpayers and this it what our financial lives will depend on.

If the taxpayers pay up, then we have a big nominal HPC and cash holders do well. If the taxpayers won't pay, then we get chaos and gold hoarders

do well as the meaning of money evaporated.

So do you think the indebted Western governments will get their taxpayers to pay up? Ireland seems to having a go, Greece has gone quiet so that looks good so far.

VMR.

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First, the smallest and weakest banks were bailed out and absorbed by the large banks

Then the largest banks were bailed out by the governments

Then the governments were bailed out by their central banks (QE)

Then Europe attempted to bail out a European state using vague words and the IMF but this has been stopped by the US and it's basically a dead-end.

So we have apparently reached the top of the bailout hierachy without solving anything so where next?

Well there is only one stage left in the bailout hierachy and that is the taxpayers and this it what our financial lives will depend on.

If the taxpayers pay up, then we have a big nominal HPC and cash holders do well. If the taxpayers won't pay, then we get chaos and gold hoarders

do well as the meaning of money evaporated.

So do you think the indebted Western governments will get their taxpayers to pay up? Ireland seems to having a go, Greece has gone quiet so that looks good so far.

VMR.

I think you summarise the end game well. There can be no more bailouts. Ultimately government cannot beat the markets. Trying only makes things worse. I think there may be one or two more attempts by governments to 'stabilise' things with massive intervention and then they will just throw in the towel. A 2-3 year recession will have been turned into a 20 year depression and job done. Sad it had to be this way though.

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I think you summarise the end game well. There can be no more bailouts. Ultimately government cannot beat the markets. Trying only makes things worse. I think there may be one or two more attempts by governments to 'stabilise' things with massive intervention and then they will just throw in the towel. A 2-3 year recession will have been turned into a 20 year depression and job done. Sad it had to be this way though.

Ahaa - but it's the governments job to do something to stop the big ugly ogre inflicting pain on us all.

If they did nothing we'd be furious at them for not protecting us. We'd ask "Why are you here? what is your purpose? why did you stand by and watch the big ugly ogre eat my friends and family and do nothing?"

Unfortunately the something that they've done is to stave off the big ugly ogre by throwing food at it so it didn't eat us all. The ogre is now bigger and uglier than before and needs feeding again.

...

And we all lived unhappily ever after.

The end.

Actually, this might be an apt way of explaining things to Labour voters.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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