*** We are in a late stage of empire...when pandering to the masses has degraded many of our most important institutions. Congress faces the biggest challenges of our time - war and bankruptcy - like a jackass staring at a computer screen. The dumb beast knows something is going on, but he is incapable of figuring it out. Do voters "throw the bums out?" Not at all. They re-elect them more often than ever before.
And over in the private sector, corporate managers live it up at shareholders' expense, and no one seems to notice. Lee Raymond, former chairman of Exxon Mobil, was paid $686 million over 12 years - an amount equal to $144,573 per day. What did he do that was so valuable it couldn't have been done by some other clock-puncher at 1/100th of the price? No one knows.
Or take William McGuire, former CEO of UnitedHealth Group. The man took shareholders for $1.6 billion during his stay in the executive office.
At this stage of decay, the masses cannot tell a decent politician from an ordinary one; nor control the pay of their own hired hands.
*** Et tu, Stephen?
We think the end is nigh, because Stephen Roach, who can usually be depended upon for a view of the world economy as gloomy as our own, has suddenly brightened up. What happened to him? Some kind of brain event? Something new in the water? We don't know, but now that the last bear has capitulated, the collapse can begin.
"World on the Mend," is the title of his recent essay. In it, he explains why the world is not going to hell in a handcart after all. "I am feeling better about the prognosis for the world economy for the first time in ages," he writes. "No, I am not prepared to give an unbalanced world the green light. But it's time to give credit where credit is due: First, to globalization for holding down inflation. Second, to central banks for collectively embarking on policy normalization campaigns."
Roach sums up by saying, "I am delighted that the global economy finally seems to be taking its medicine. Let's hope the cure works."
What is this medicine the world is taking? What is this miracle elixir that cures debt and deficits? What panacea has been developed in the secret laboratories underneath the Fed's headquarters in Washington? How does it heal the sick trade imbalances and wipe away the ugly debt that blemishes the poor in America's suburban ghettos?
Roach does not exactly say. We presume he refers to rate increases in the United States and the lack of rate increases in Europe. Now, he claims, "the world is going to collectively alter its game plan and respond...to the problems."
Oh, of course. That explains it.
Apparently, Mr. Roach has much more faith in public officials and public policy than we do.
We always turn back to the fundamentals...back to the essentials...back to basics. When a debt is run up, it must be paid off - by someone, somehow, sometime.
Sinning is more fun than repenting. A boom is more fun than a bust. Paying off a debt is likely to be less pleasant than contracting it.
Against those verities we have Mr. Roach's newly found faith that the managers, manipulators, kibbitzers and regulatory parasites. The world's central banks have found a way to coordinate their policies so as to "rebalance" the planet's financial system and sustain its balmy growth indefinitely. Even if the Morgan Stanley economist had come to believe it, our guess is that he'll regret having said anything.
I say briefly: Best! Useful information. Good job guys.
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