Are we looking at a fundamental change in the economic climate of the planet? Have the warm balmy days of easy credit, built on easy energy, ended? I wonder.
Who will survive? The supersauruses of the world? The Citi Banks, the AIGs, the GMs? Or will it be the scrappy little mammals, the little well run companies exploiting new economic ecosystems, that are best suited to a new climate?
The government thinks that it is in the best interest of the world to throw some fur coats on the lumbering swamp reptiles so that they can survive as the glaciers descend out of the mountains and over the once hospitable plains. And the government may indeed keep them alive, for a while. In the process though they retard the growth of a system in which the new mammalian companies may actually thrive.
The fur coated artifacts of another era demand much in the way of sustenance. What little food is left in this new colder world is given to them by the government. Barely able to move in the increasingly difficult climate, the feds conclude that the best way to keep the dinosaurs going is to feed them more of what little food resources there are. That will keep them around until the glaciers again retreat and the sun is warm once again. Meanwhile the little mammalian companies, the companies that will thrive if just given the chance to compete, begin to starve. Some die.
Soon the dinosaurs, despite their very expensive fur coats die anyway. The world has changed and it is not their world any longer.
The world is not GM’s or AIG’s or Citibank’s any more. It belongs to as yet unknown, better adapted companies that will be able to deliver goods and services in new and more efficient ways. And the world will prosper once more. So long as the government doesn’t kill everything in its effort to save the dinosaurs.
Warren Buffett is someone for whom I have a great deal of respect. I may not agree with him all the time, but he is intellectually honest, and the below article is an example of this honesty. Of course he did make some very bad moves in 2008 and he had to address them. But he could have bobbed and weaved, and he did not.
Warren Buffett Tells Shareholders He Did "Some Dumb Things" In 2008
Absolute Return Funds: “delivering bond-like returns but carrying equity-type risks.”
Cramer Is A Gold Bug?
Remember the depression continued for another 7 years after this. But a great piece of history.
Henderson on Piketty, Part 4
2 hours ago