Speed World: Gerald Ashley
Speculation - Trading Financial Biases and Behaviour
Gerald Ashley: Two Speed World Part 3
Gerald Ashley, author of Two
Speed World and Financial
Speculation, talks to Kenny of www.tradersdaytrading.com.
Gerald is an advisor, a writer and a speaker on business risk and
decision making. Gerald has over thirty years of experience in
international finance, having once worked for Baring Brothers in London
and in Hong Kong, as well as for the Bank for International Settlements
in Basel, Switzerland
The Gerald Ashley Interview Part 3
Kenny: Gerald, coming
back to current markets, how have we managed to get ourselves into such
an economic mess?
Overspending politicians, myopic Central Bankers financing
too much debt with cheap money and misguided regulators. The "No more
boom & bust" culture was fatuous. Now we are paying for it.
Kenny: So who is to blame for the
situation that we find ourselves in now, with the banks and the massive
All of the above - and ourselves. We borrowed too much, indulged in
fantasy economics of "equity release" from housing etc. Basically we
spent more than we earned.
Kenny: Is it true that
the constant warnings about the impending debt crisis was a self
fulfilling prophecy, created by putting people off from spending, or
was it already a runaway train that could not be stopped?
No - It was already fulfilled because anyone who chose to
look could see the calamity coming. Many people warned about the
situation for years - but no one listens when the party is in full
Kenny: What is your opinion of how
the worlds governments have coped the crisis, have they successfully
saved us from something much worse, have they made the situation worse,
or are they simply passengers on that runaway train?
They found themselves in a hellish position in 2007/08 as things
started to spiral. They had to prevent a depression, but the cost of
supporting economies through that period will be a sideways grind in
growth (or lack of it) for possibly a decade.
Kenny: What are the main mistakes
that they have made and why were the mistakes made?
Failure to correct the massive global economic imbalances -
these will be sorted out, but the longer it takes the more painful it
Kenny: Markets have
taken quite a beating over the last couple of weeks, is the worlds
economies now in a terminal spiral or can it still be saved?
Things always recover the problem is it takes time - I think
Mervyn King of the Bank of England is completely correct in predicting
a "lost decade". It is clear that a lot of the wealth generated n the
"noughties" was flimsy debt fuelled spending, not real wealth. Now the
debts are being repaid and we will shrink back to a poorer reality.
This will have long-term effects.
What is does the future now hold for the major currencies
such as the USD and the Euro, can they be taken back from the
Currencies are just a price - They will go up and down in free markets.
To my mind the US Dollar is not "finished", though clearly the US are
trying to devalue as much as possible to boost their own economy. The
trouble is everyone else wants a weak currency as well. The Euro is a
busted flush - It will break up as it’s simply not credible - it was a
harebrained scheme from day one, that was always going to be tested to
destruction in any prolonged economic downturn.
Kenny: What steps do we
need to see taken from here to rescue us all from the current economic
I should like to quote Cicero from 55BC! "The budget should
be balanced, the Treasury should be refilled, public debt should be
reduced, the arrogance of officialdom should be tempered and
controlled, and the assistance to foreign lands should be curtailed
lest Rome become bankrupt. People must again learn to work,
instead of living on public assistance."
Kenny: Clearly, nothing
changes then! So the big question is, are our governments up to the
task in hand?
Doubtful - politicians have short term
horizons determined by the electoral cycle, this means they often
blunder around with short term initiatives that can make things worse!
Kenny: Thanks Gerald, I
appreciate the time you have taken to talk to us today.
Speculation by Gerald Ashley