As a young student a few years back, I remember a teacher telling me “never assume your reader knows what you know.” She didn’t mean that I was smarter than any of my readers; she meant that shortcuts in writing needed to be explained. Thus, when I received the short email below I laughed out loud. I laughed because it immediately reminded of the teacher above, and I realized that I had forgotten that simple little lesson after so many years of remembering it. Now that I think about it, perhaps that is not so funny …
What in the world is BOJ?
The easy answer is Bank of Japan. Sorry about that.
At the center of the panic over European government debt is the fear that the European banking systems could be infected. That would affect a global network of financial institutions, potentially freezing up lending and affecting U.S. companies that do business internationally.
The above is a clear statement of what the market fears regarding the European debt crisis. When you take the statement on face value, the fear seems palpable. Here is my problem, though. Every day, I read and listen to intelligent sources that have opinions 180 degrees apart on this issue. Bill Gross, the head of Pimco Bonds, for example, says that the Italy debt crisis is not contagious because Italian banks and the Italian government hold most all of the debt and the Italian people have a high rate of savings and lower debt. Others have suggested the same for different reasons. On the other hand, “the president of the European Central Bank, Jean-Claude Trichet, said Europe was at the ‘epicenter’ of a debt crisis that had to be of concern to the entire developed world.”
So how does one arrive at a reasonable conclusion regarding the current crisis? Well, one cannot. Facts are facts, but they do not always lead to logical conclusions. When people lose control over events, events take on a life of their own. At that point, anything can happen. Think about it this way. Even if there is no fire in a crowded theater, if someone yells, “fire,” there might as well be a fire.
On a different note, a reader has written in with a “tip,” so I thought I might pass it on to you …
The future of palladium [Pd] is dirt cheap, and it will surpass the price of its sister metal platinum [Pt]. I mean, with Pd doing the same as Pt, why shouldn’t the prices merge with Pd going higher. I suspect Pd will be at least $500 higher.
I do not endorse the above. I have no idea what the metals will do. I just thought it would be interesting for those who trade metals, something to research, perhaps a trade …
Trade in the day – Invest in your life …
