Bluefield Daily Telegraph, Bluefield, WV

September 12, 2012

September set to be another bumpy ride


CNHI

— You can learn a lot about life and the world by watching old movies and reading classic works of literature. Great lines can sum up thoughts and emotions in a few words.

In the 1942 classic WWII film “Casablanca,” Claude Rains as Captain Renault uttered the immortal words, “I’m shocked, shocked to find gambling going on in this establishment!” That was shortly before the croupier approaches him, hands him a wad of bills, and says, “Your winnings sir.” It’s a funny moment that makes me laugh every time.

If you listen carefully to the dialogue in that movie you start to get a feeling that they were not only talking about the world at war back then, but also about the world in chaos today.

I get the same reaction every time I hear someone in the world of Wall Street expressing shock and dismay about new revelations of someone gaming the system. Who would have thought that gambling, speculation and manipulation would be going on in the financial markets? Be still my heart.

When Spanish Prime Minister Mariano Rajoy and French President Francois Hollande (both extreme socialists) were elected to office, it reminded me of the character Rick Blaine’s final words, “Louie, I think this is the beginning of a beautiful friendship.”

After only a few months, regarding the relationship between these two world leaders, we know that the electorate now understands that more of the same does not result in a different outcome. Therefore, in Europe unemployment continues to rise, housing deteriorates and hope declines.

The world is misinformed, as the same failed policies of the past are repeated again and again and again.

Most people have absolutely no clue about high-frequency trading, mark-to-model or a dozen other tactics and techniques that create fraudulent and manipulated financial markets.

Every day as the world crumbles, the same corrupted names come to the top of the list. Again and again, the fines are levied, the wrists are slapped and business continues as usual. From Goldman Sachs to Morgan Stanley and from J.P. Morgan to Bank of America, it’s always the same.

As so now we arrive in September. After an August that may go down in history as one of near terminal boredom, the fireworks are about to go off again.

Governments and central banks have pushed many decisions off to this month with hints and promises through the summer of being ready to come to the rescue if needed.

Fed Chairman Bernanke did so again recently, but increased the level of assurances enough so expectations are high for action from its Federal Open Market Committee meeting this month. Economic reports in the eurozone continue to weaken, putting still more pressure on officials to act. Moody’s has put the European Union’s triple-A credit rating on a negative outlook. The number of unemployed workers has surged to a record 18 million, or 11.3 percent, and both consumer and business confidence is at a three-year low.

Officials are back from their vacations and this is the month of various meetings in Europe that are also supposed to finally come up with meaningful solutions.

But European stock markets are uncertain and still waiting. Unknown is what kind of fiscal agreements Spain and others will have to agree to in order to have access to the program. Spain has said it will not take the required next step of requesting a bailout until it knows the details of what will be involved.

Will central banks end the summer’s uncertainties with positive actions that will disrupt the history of September being rough on investors? We’ll soon know.

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Nick Massey is a financial columnist for The Edmond (Okla.) Sun.