NEITHER 'BULLS' NOR 'BEARS', BUT OSTRICHES AND CHICKENS.

The meltdown currently being experienced on world stock markets is causing much hand wringing and very little real action.

Governments hold meetings while the people watch their savings and pensions vanish down the drain. In Europe, the lunatics who invented the 'Euro' stick their heads in the sand, ostrich-like, and refuse even to contemplate the dismantling of their pet project, even though this is the only long-term solution to the difficulties they are now experiencing. Instead, the European Central Bank has committed itself to buying up vast amounts of worthless Italian and Spanish government bonds, the consequences of which action will eventually be visited on the people of Europe, but not before enough time has passed for those responsible to be long gone. In the UK, it looks increasingly likely that the Bank of England will issue yet more paper through it's scheme of 'quantitative easing', a programme that will inevitably lead to uncontrollable inflation in the future, making us all much poorer but, again, not before the current incumbents of office has departed and can no longer be held accountable. As for the USA, their borrowing is continuing to grow and their economy is clearly not in a healthy state; with a Presidential election due next year, the risk of political paralysis is real and markets will become increasingly jittery as a result. Added to all of the other factors, there seems little likelihood of there being much good news in financial circles for at least the next 18 months. The old stock market adage of 'sell in May and go away' should, perhaps, be amended to 'sell now and come back in 2013' and even that may be far too soon.

The problem is that no one is willing to take the action that is really needed for fear of the dire electoral consequences. We have all been living beyond our means for decades and now the chickens are finally coming home to roost; the final evil day of reckoning is upon us and all we can do is batten down the hatches and hope. In the meantime, the Chinese must be laughing their socks off.