Animal spirits again
Wherever one looks in the business world, there seem to be animals. And that is not necessarily good news.
The famous British economist John Maynard Keynes wrote about the role of psychology˛ or what he called “animal spirits”, in investment decisions. Keynes saw investment — for example, by companies in new products or plant — as a key factor in economic growth.
The theme of animal spirits was also taken up in a 2009 book by George A. Akerlof and Robert J. Shiller, called Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism. As I wrote at the time, I found the monkeys on the book's cover more fun than its contents.
Then there are the various idioms that involve animals. We looked at many of these in our special test in Business Spotlight 3/2011. These idioms included the following seven terms and expressions:
- Top dog
- Fat cat
- Chicken feed
- Take the bull by the horns
- Loan shark
- Get your ducks in a row
- Shoot the puppy
Two other aminals that I have spotted out and about recently are bears and chickens. They are a dangerous combination.
The global financial services firm Morgan Stanley wrote in a research note that the “bond bears are out of hibernation and are hungry”. Bears are investors who believe asset prices will fall and therefore want to sell.
The reference here was to the falling prices (and therefore increasing yields) of government bonds, following a sell-off on Monday. Some investors seem to believe that the long bond-rally is finally coming to an end. They see governments as being willing to accept higher rates of inflation, which are bad for bond prices.
The chickens that I spotted were not explicity named but I could see them clearly in comments on the euro by former European Central Bank chief economist Otmar Issing, one of the main architects of the single currency. In a withering critique of the politics of eurozone countries, Issing said, "one day, the house of cards will collapse".
Issing clearly believes that the euro's chickens will come home to roost. In other words, the failure to construct the euro properly in the first place, and the subsequent decisions by eurozone governments, will at some point lead to the currency's downfall.
If Issing is right, all hell would be let loose in the euro-jungle. And the bears would run the bulls — and the chickens — out of town.
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