Thread by @hendry_hugh

@GeorgeGammon recently asked me..Why did you give up macro ?

Because financial danger to the many has become a signal to shut off their sight, suspend their judgment pursue an unaltered course to the brink, on the unstated premise that the danger will always remain unreal owing to the supposed super-sovereign power of the central banks

And their cronies in fin media spooning their spider lullabies that « they got this ». They’re like a foghorn at the centre of the financial universe, blowing the unwary investor, not to sound a warning, but to summon the fog once more.

May they be damned and all who seek their empty shelter…

I thought of this reading an article in today's F. Times. Expensive intellectual real estate given over to a prof of banking at Columbia, a certain Frederic Mishkin. He ain't happy with the Fed. "Flaws are evident..."

According to the prof, they should be paying greater heed to the Phillips Curve and research that he co-authored at the US Monetary Policy Forum. Hmm...I thought,..I remember the past differently, allow me to explain

I think of the princely protagonist in Dostoevsky's, The Idiot, another MYshkin, who only saw the positively good in everything, and I mean everything...

I remember...I was short $200m Icelandic krona at the time. Not a Yard but still, c. 2% of the country's 2012 GDP...I was KING COD for a while...Why !! the more logical of you might ask?

Cause I was bearish the outlook for US house prices for the next 2 years. This was way back in 2006. Yes, I know that's a v long time ago for many of you but hold on, I hear you say...you're worried about US house prices and you short COD and volcanoes...what gives?

Well, you need a big incentive to park institutional money in places where the lava flows. After the nasdaq crash, rates fell to the floor; to levels unprecedented outside Japan. With the Fed at 1%, Iceland offered you 5%. I thought of it as a giant foghorn...remember those?

Everyone was content. Fine. But what if Fed rates rose to taper a bubble in US house prices? The giant might lose its grandeur. Wait, you're telling me that you see a US bubble and you short the Land of Cod...paradoxical thinking...orthogonal risk taking? Oh, how my head hurts.

It was a bloody nightmare. Today, you look back and conclude the world is rational. A deviation in trend was detected by smart people and equilibrium was soon restored. The truth was different. I'm just gonna say WFC which made an all-time price high the month that LEH went bust

Which is to say that carrying all this risk angst for 2 years as the world partied oblivious...watching the meteor get closer & closer till it streaked the night sky, well, it had its consequences.

MYshkin, his cup ran over with positivity. Blame dark forces, the energy lingering below the surface of our consciousness. The imperative of apocalyptic aspiration vs our own earthly limitations. Everyone underestimated him; an idiot, they said, incisive intellect more like...

Back to reality. Mine's at least. Life imitating art via the dark lens of a distorting mirror, where yes is no...no is yes...You see the good prof put his name to a paper, Financial Stability in Iceland which had been produced by the local chamber of commerce.

It was positively brimming with positivity. It was also brimming with nonsense and gained huge notoriety 3 years later when Iceland collapsed. You can read about it here ft.com/content/17e103…

We learned later, much later, that the good prof was paid $124k to co-author; and they give hedge fund managers a bad rap ?? Watch the good prof squirm here when quizzed on his academic acumen,

Me? What happened to me, cried the narcissist. I had to fold. Halfway through my risk campaign I had to jettison some risk - this Atlas Had To Shrug - climb the pyramid of best ideas handicapped by the need to survive. I covered my short. Soros, I was destined not to be...

Funny, but the story re-surfaced later, that i was the guy who wanted to break the Bank of Cod. I was on a tugboat in the port of Santos, the town where Pelé played, and my Blackberry exploded with the rage of Viking Icelanders. They saw me as the enemy. I saw it differently.

Back to the present and I still think that the prince is below par; call me vindictive. He thinks the Fed is behind the curve; that the inflationary genie has left the lamp. Me? I'm waiting till the deity of the 10 yr breaks 2% to save myself the grief of all this grandstanding.

Maybe it's his pitch to run the Fed? Dostoevsky's The Idiot in charge of the Fed? Hey? Wasn't I suggesting Joe Rogan as chief of the Fed in 2020 - apologies Joe, you're no idiot, you're the real Prince - but if that 10 Y breaks 3% -well that's for another time...

I'm writing this listening to the most excellent Astrocolor, but remember that,
After (after)
Laughter (your laughter)
Comes tears (there'll be tears)
(oh, oh, oh)
Watch it here,

And whilst you're there why don't you visit me at youtube.com/hughhendryoffi… or visit hughhendry.com for a free copy of The Age Of Chaos

Fog horning you away from the précipice...with positive, paradoxical, vibes from a tiny island in the French West Indies 😘...
Now, I got a house to finish building...

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