Well that's one pantomime crisis temporarily averted in Washington. Now lets look for some ashes to rake over so that we can start another wildfire blaze! Or at least that looks to be the way of markets currently.
There are always periods when the bears rule the markets and at these times what little good news is around is often swamped and overwhelmed by the negative or in most cases just the fear of the negative.
And, lets face it, having stared into the abyss over the last few years the fears still have a tangible substance that can be quickly recalled along with still open wounds or painful scars.
So the markets weren't strangely apathetic to the drama in Washington, they were just waiting to dump on us once the situation had been resolved.
This is one of those periods where the macro economic news is overwhelming anything positive that might be happening on an individual investment basis.
The word contagion is everywhere and appears to be the new "buzz" word following the credit crunch. I guess that at the end of the day very few, if any, of us know what contagion risk is present.
I wouldn't necessarily say that ignorance is bliss but I think that there are too many spouting an opinion from within the shadow of a more informed expert in a sort of sheep mentality.
In the past there have always been sovereign defaults and even Gordon Brown's attempts to cement his place on the world stage was through an agreement for the worlds banks to stage a controlled default of African debt.
Before the credit crunch defaults were normally isolated to a group of banks rather than every single bank and government on the planet which is what is often spouted today. You could even argue that the repackaging and selling on of debt is the ultimate misselling scandal.
Going forward, if these were my companies then I would be actively planning and unwinding as much of these risky compexities as possible. I would be looking for credibility and firm foundations from which to grow. It might be slower but over time a significant momentum can be found in steady predictable growth whilst avoiding the all or nothing risks that have become custom and practice in the last decade or more.
I am a firm believer that there is a light on at the end of the tunnel though and even that each country is having its own light bulb moment after the desperation of printing more paper and throwing it on the bonfire of the cheap credit bubble.
Of course that also means that many of the excesses are still there but the changing, or at least moderating, of behaviours gives some of the inflationary excess a chance to return to more normal levels in line with GDP growth.
If this is taking place then, although there will still be breakout fires to put out, it is just a case of time to help the healing process and bring budgets and cashflows back into equilibrium.
In time there will also be a next generation with little connection to the credit crunch other than its place in history.
True cultural change can take years but lets hope that we can instil some acknowledgement of consequences in them as the current generation had no such inhibitions.
And, with no organisation (or its legal stewards) penalised (other than Lehmans being allowed to fall), it is worrying that banks and governments will probably not deliver the protection that we need. In a way they have already detached themselves from the consequences of the credit crunch and believe it won't happen again on their "watch".
I hope I am wrong but it feels like it is the "stewardship" element that Directors seem to have forgotten. Directors are "stewards" of companies on behalf of shareholders and this is their ultimate accountability. I guess the same is true for MP's and Governments.
Greed always seems to win out over good corporate governance I guess, which is worrying!
Be lucky!
There are always periods when the bears rule the markets and at these times what little good news is around is often swamped and overwhelmed by the negative or in most cases just the fear of the negative.
And, lets face it, having stared into the abyss over the last few years the fears still have a tangible substance that can be quickly recalled along with still open wounds or painful scars.
So the markets weren't strangely apathetic to the drama in Washington, they were just waiting to dump on us once the situation had been resolved.
This is one of those periods where the macro economic news is overwhelming anything positive that might be happening on an individual investment basis.
The word contagion is everywhere and appears to be the new "buzz" word following the credit crunch. I guess that at the end of the day very few, if any, of us know what contagion risk is present.
I wouldn't necessarily say that ignorance is bliss but I think that there are too many spouting an opinion from within the shadow of a more informed expert in a sort of sheep mentality.
In the past there have always been sovereign defaults and even Gordon Brown's attempts to cement his place on the world stage was through an agreement for the worlds banks to stage a controlled default of African debt.
Before the credit crunch defaults were normally isolated to a group of banks rather than every single bank and government on the planet which is what is often spouted today. You could even argue that the repackaging and selling on of debt is the ultimate misselling scandal.
Going forward, if these were my companies then I would be actively planning and unwinding as much of these risky compexities as possible. I would be looking for credibility and firm foundations from which to grow. It might be slower but over time a significant momentum can be found in steady predictable growth whilst avoiding the all or nothing risks that have become custom and practice in the last decade or more.
I am a firm believer that there is a light on at the end of the tunnel though and even that each country is having its own light bulb moment after the desperation of printing more paper and throwing it on the bonfire of the cheap credit bubble.
Of course that also means that many of the excesses are still there but the changing, or at least moderating, of behaviours gives some of the inflationary excess a chance to return to more normal levels in line with GDP growth.
If this is taking place then, although there will still be breakout fires to put out, it is just a case of time to help the healing process and bring budgets and cashflows back into equilibrium.
In time there will also be a next generation with little connection to the credit crunch other than its place in history.
True cultural change can take years but lets hope that we can instil some acknowledgement of consequences in them as the current generation had no such inhibitions.
And, with no organisation (or its legal stewards) penalised (other than Lehmans being allowed to fall), it is worrying that banks and governments will probably not deliver the protection that we need. In a way they have already detached themselves from the consequences of the credit crunch and believe it won't happen again on their "watch".
I hope I am wrong but it feels like it is the "stewardship" element that Directors seem to have forgotten. Directors are "stewards" of companies on behalf of shareholders and this is their ultimate accountability. I guess the same is true for MP's and Governments.
Greed always seems to win out over good corporate governance I guess, which is worrying!
Be lucky!
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→One Crisis averted, what next.
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