"What Could Possibly Go Wrong?"
by Addison Wiggin
“When there is a lack of honor in government,
the morals of the whole people are poisoned.”
- Herbert Hoover
“The budget should be balanced,” a wise man stood and encouraged his fellow statesmen. Then continued, “the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest [we] become bankrupt. People must again learn to work, instead of living on public assistance.”
You might think one of the members of the House had given such a speech on Saturday prior to the stopgap measure being passed. Matt Gaetz, maybe? If you did think so, you’d be off by about 2,067 years. Or maybe not.
The quote is often attributed to Cicero, a Roman statesman who as Consul of the Roman Republic tried - and failed - to head off the coming of Julius Caesar and the Roman Empire. Apparently, there is no real record of him having spake these words in public. Nor does it appear in any of his known writings. A more modern search on Google’s A.I. “Bard” tells me “the quote first appeared in the early 1900s, and it has been used by politicians and commentators ever since to promote conservative fiscal policies.”
Then, the Bard offers this unsolicited opinion: "While Cicero did speak out against government corruption and excessive spending, he also supported social programs that helped the poor and needy. It is unlikely that he would have endorsed the harsh and punitive policies advocated by the modern-day proponents of this quote."
Ah, Bard. Faithful to the core. “The misattribution of this quote to Cicero,” Bard admonishes, “is a reminder of the importance of critical thinking and source evaluation. It is important to be aware of the potential for misinformation and to be skeptical of quotes that seem too good to be true.” Too good to be true. Well, at least he got that part right.
Let’s think this through for a minute. Even if Cicero did not say it, why has the quote been hanging around for a 100 or so years? Like all works of fiction there must be some truth that resonates. What, after all, would be wrong with: a balanced budget…a treasury refilled..the arrogance of officialdom tempered...and assistance to foreign lands be curtailed?
Oh well, Cicero fought against the rise of the Empire and lost. We found the quote in the lead of one of our favorite monthly reads, Dr. Marc Faber’s "Gloom, Boom & Doom Report." Dr. Faber - or “Dr. Doom” as he’s known by Barron’s - is a Swiss born, iconoclastic economist. He earned his PhD in economics in Zurich at the age of 24 and spent most of his professional career trading stocks and bonds and managing money in Hong Kong for Credit Suisse Lyonnais, among other firms. He’s lived in Chiang Mai, Thailand for a number of years.
We bring him up for a couple of reasons. First of all, his book "Tomorrow’s Gold: Asia’s Age of Discovery" was a formative read for me when I was still wet behind the ears in this business. Second, he’s a super nice guy. He often attended and spoke at our Vancouver conference while we were playing host back in the day. I recall one day seeing him sitting at the bar in the lobby by himself. I sat down and we chatted for several hours… about the business, about investing… about travel, women and life. The conversation has resonated with me since.
In case there has to be a third reason, here it is: While reading his letter last night, rather… this morning, at about 3am, Marc reminded me why we do this work at all. The headline to October’s issue of "The Gloom, Boom & Doom Report" is a question: “Is the Current ‘Strength’ in the US Economy Based on a ‘Statistical Mirage’?” It’s a good question.
Faber then goes on to answer the question in 47 pages of fairly dense economic analysis replete with charts and quotes from a host of other writers and thinkers I respect. We’ll give you the short version: “Yes.” “The current rebound in the economy,” Faber cites David Rosenberg, “is a ‘statistical mirage’. It is orchestrated by record amounts of monetary and fiscal stimulus that are simply unsustainable and actually risk precipitating a very unstable financial and economic backdrop in the coming years.”
That much we know already, right? The question we habitually ask when reading Faber or anyone else is “what could go wrong?” It sounds hypothetical in nature, but, really… I’d like to know… “what could go wrong?” It’s the only plausible question to ask given the “statistical mirage” we’re consistently wooed by. How do you manage your finances in the face of uncertainty of such epic proportions? If, as Rosenberg suggests, the “record amounts” of monetary and fiscal stimulus are unsustainable… by definition they must end. What happens next? These are big questions and it’s later in the work day for me, so we’ll pick this line of thinking up again tomorrow…So it goes."
No comments:
Post a Comment