This is a story about volatility...
Most people don't like Mondays. I don't like Wednesdays. I refer to them in my own mind as "whacky Wednesdays" and try and make a mental note not to be travelling anywhere on that midweek hump day. The world always seems to be going bezerk on a Wednesday.
I woke up early this morning to check what the Nikkei - the top 225 shares traded on Tokyo's stock market - was trading at. Money has to go somewhere. When money takes flight, it can run to save-haven currencies, like the Swiss Franc, or it can flow into to other global markets: heading East or West in a follow-the-sun tidal wave. 3 trillion dollars are currently on the move.
Capital can move into scarce commodities like gold when stuff is really turning sour, like it did in the lead-up to the credit crunch. Finally, there are the bond and gilt markets, for the mugs who believe in the power of governments and corporations. Built on top of all these securities are quadrillions of dollars worth of derivatives, but it's very hard to get any sense of what the value of these 'assets' are, and where they're held.
Derivatives are a bet on an underlying security's value. Futures and options are the classic instruments, that allow you to bet that the share price of a company is going to rise or plummet more than the market expects.
The thing about placing a bet is that it manipulates the market. George Soros was famously given so much leverage by the investment banks backing him, that he was able to exhaust Britain's foreign currency reserves and force the UK out of the European Exchange Rate Mechanism, causing the value of Sterling to plummet.
Laughably, people were able to speculate on the outcome of the EU referendum in very much the same way... including George Soros! The amount of commission earned by investment banks on trades last Friday will pay for some pretty good bonuses this year, I expect. The result of the referendum was obvious: speculators had placed such big bets that there was a vested interest in the result.
When a jockey jumps off a horse, or a goalkeeper throws a game, are we surprised? An entire baseball team fixed the world series, for fucks sake. It's basic economics: people respond to financial incentives.
If you want to know what's going to happen, just follow the money.
Vast sums of money flooded out of Kuwait before Saddam's invasion. Loose lips sink ships, but loose lips also make the whole capitalist system go round. How do you think hedge funds know what to bet on? They've got a fucktonne of bent lawyers, who tell them what's happening with every merger & acquisition... that's how!
You can somewhat regulate share dealing: it's obvious when somebody has bought or sold a big stake in a company. But with spread betting, derivatives and FX, there's no record of who was clearly 'insider dealing'.
Opinion polls and equity markets mean jack squat. If you want to know what's going to happen in the global markets, have a look at which way the betting is going.
When it comes to bookmaking, the favourite is the one that's likely to win, right? Well, err, not exactly. A bookmaker's job is to price things according to sentiment not probability. If you want to sell anything, it has to be at an attractive price to your buyer.
So, when we came close to the referendum, there were very generous odds on backing Brexit. What does that say to me and George Soros? We're both speculators. Neither of us hold a position. We've got a big purse of money, and we're going to back a particular outcome, and the bookmakers have baited their hook, looking for a buyer with deep pockets.
In a year where the 5,000 to 1 shot, Leicester, win the Premier League, surely people could see that the generous odds were pointing to something? In a 1 in 20 horse race, odds of 1 in 5,000 are generous. In a 2 horse race, the odds that we would remain in the EU peaked at 86%. Don't you feel just a little dumb, if you think that everybody is playing fair? There's so much money at stake, why would they?
Why do the rich keep getting richer, and the poor keep getting poorer?
Well... the game is rigged you stupid c**ts. From sharp-elbowed parents getting their kids the best places in school, to executives making sure they get a big pay-rise and bonus while holding down the wage inflation of their underlings. This isn't some illuminati conspiracy-theory bullshit. The hard data is right there in front of your eyes.
So, tomorrow, your pension fund gets trimmed still further and your currency takes another hammering. More wealth leaves your pocket and enters the pockets of the guys who know what's going to happen next before it's even happened, because money talks.
I also fear that there is going to be some terrible event soon, because of the forces of hell that have been unleashed by this jingoistic rhetoric, hateful language and right-wing empowerment. I have this feeling of dread that a mosque is going to be desecrated, or another person like Omar Mateen or Thomas Mair is going to commit an atrocity. The tinderbox of hatred has been set alight by those who seek to profit from instability and volatility.
Anybody who thinks that bankers are suffering from the Brexit vote is an idiot. The markets love volatility, and trading floors are making a killing.
Tomorrow is business as usual in the City and with the hedge funds, and the idiotic British public have played into the hands of speculators like George Soros spectacularly, yet again.