Empire of Dunces


Black Swans

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Something else has been pointed out to me recently – namely that I am sounding just a tad too authoritative when it comes to making predictions about the future. And that it comes across as a bit arrogant, when at the same time I criticize such learned and accomplished men as Greenspan, Bernanke, and every liberal’s favorite Nobel Prize winner in economics – Krugman.


Sorry about that, but I had to recover from the attack of hysterical laughter that had me lying on the floor. Far be it from me to claim that any of these distinguished gentlemen are less than brilliant. But you have to realize that there can really only be two possible reasons why somebody would do and say what they are. Either they are stupid. Or evil. Personally, I do not believe that they are stupid. These three people have been instrumental in starting the whole debt crisis in the first place. Well, the first two anyhow. Krugman is just an intellectual enabler with really good press. Shocking how that works for a NYT columnist. And considering that that dimwitted Kenyan marxist in the White House also got a Nobel Prize should more than amply demonstrate the value of that particular hokum.

Granted, I can no more see into the future than anybody else. But economics – at its most basic – is really not that hard. And the predictions that I am making are based on broad economic developments that anybody could recognize. The problem is just that most people refuse to acknowledge that things can change. Sometimes drastically change in a very short period of time. People have the tendency to extrapolate the status quo ad infinitum into the future. But that is not what happens. The so called Black Swan events are rare. Very rare. But they happen. Inevitably. Again and again. And these events destroy the status quo, sometimes to the point that an entirely new system becomes necessary. Usually, there is just a lot of turmoil, such as when LTCM collapsed, or more recently Lehman. But occasionally, the elites (political, economic, and even cultural) are so desperate to suppress these Black Swans that they simply exchange a small catastrophe in the present for a large one in the future. This is where we are at now. Greenspan was desperate to ‘save’ the markets after the collapse of the New Economy that he set interest rates to completely unrealistic levels, thereby causing the next bubble in real estate. By now, there is only the Treasury bubble left really. And I am of course not just talking about US treasuries, but almost all government debt. And now this is the kind of bubble, the popping of which will cause systemic shocks that simply annihilate the status quo.

Once again – I do not wish to sound too authoritative. But you are paying me to invest your funds. So I am forced to look into the future and make predictions according to my best knowledge and experience. And that is telling me that we are once again at a point where things can change drastically (and permanently), instead of returning back to the same old status quo, after a period of turmoil. And it behooves us all to at least prepare for such an eventuality. Major Black Swan events have the ability to destroy wealth on an epic level. And it is necessary for all of us to prepare for that, instead of blindly accepting old canards, like ‘if you want your money to be safe, put it in Treasuries, or Bunds.’ We are going to have to accept certain risks, not just to grow our money, but just to keep it safe. In that spirit, I am encouraging all of you to stay away from even AAA-rated government bonds. We will speak in more detail about specific, tailor-made strategies to keep your wealth safe, and even grow it substantially. Remember the old adage – the best time to invest, is when the blood is flowing in the streets (literally this time, not just figuratively!). And we are not there yet, not even in Greece or Thailand.


Written by gloege

June 1, 2010 at 19:55

Posted in Uncategorized

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