Why The Worst Will Soon Be Over - John Mauldin’s Outside the Box - InvestorsInsight Publishing
This is hilarious. John Mauldin use to be rather sensible on many things but then he started defending Alan Greenspan and now appears to be outright lobbying for Paulson’s job. It sounds like this could have been written by an old Soviet apparatchik completely devoid of economic theory focusing on the psychology of market participants. It basically says that the rules of economics and banking have changed; the government did what it had to do and thank God because it could have been worse if they didn’t. Oh yea, and don’t waste your time trying to figure out why things went so bad or who is to blame because we have to move past that. Don’t worry the government is on it so invest in bank stocks!
Some great excerpts:
“The result is state directed capitalism. It has lead to howls of outrage across the investment and political spectrum, from the purists who believe market forces should be allowed to work themselves out, to the mob baying for capitalist blood. The cacophony of noise and finger pointing will continue for many years, but both arguments are irrelevant. They are based on old rules. For just as in war habeas corpus and other rights are torn up, so in a financial meltdown the old rules are shredded.”
“This multiple approach is already being favourably viewed in other countries; it is speedy, cheaper and turns the all-important psychology from one of utter despair to merely gloom. It is more effective, and overall less burdensome on the taxpayer than any other solution.”
“State directed capitalism must emerge with heavier-handed, state monitoring of its population.”
“Inevitably these [state directed banks] are ponderous and suffer poor shareholder returns, but in a whacky way, the system works.”
“Many savers will still lose money in those weaker institutions which the governments have rightly decided to sacrifice, to preserve the core of the system. It will be unfair and unpleasant, but the right action. More important is that just as banks in each country will consolidate down to a core handful, so the same will apply in many other sectors. Consolidation is the new trend.”
“The imminent brave new world of state directed banks and cartelisation of sectors is inherently corrupt and less efficient, but should work. It is certainly the least bad solution for us all; yet this very different and cartelised world could be rather interesting, and profitable.”
John: Say it ain’t so!