Short for the long term

The Economist has just started a blog. One of the recent entries is about the US dollar as long term short.

A FINANCIER of my acquaintance cleverly shorted the stockmarket during the technology bubble. Unfortunately, he did so in 1997. And 1998. And also 1999.

He made a killing in 2000—but I am informed that it was only by very good luck, and some fast footwork, that the killing crossed the finish line ahead of bankruptcy, which had been nipping at his heels the entire way.

(Now please give me a minute to recover from that rather exhausting metaphor.)

The problem of the short-seller is summed up in my favourite financial adage: "The market can stay stupid longer than you can stay solvent." It was obvious to many professionals by 1999 that the stock market was in a bubble, but without knowing when it was going to end, they found it hard to turn their insight into an investment coup.

The same frustrated forecasters can now be found in the currency markets, thanks to America's trade deficit.

I am tired of using the same old descriptions of America's current account imbalances that everyone falls back on—gigantic, humongous, titanic, and a few things that can't be printed in a general interest newspaper. But it is hard to come up with an adequate metaphor to replace the overused superlatives. If America's current account deficit were a car, it would not be a Hummer, but a Mack truck. If it were a pro-wrestler, it would be Andre the Giant wearing Hulk Hogan as a shrug. If it were a newspaper, it would be The Economist. In short, it looms singularly large.

Read the complete entry it is very educational and funny.

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