What I learned by chance

Years ago, before the financial crisis that has defined a generation, I took my daughter to play soccer beside the Keelung River. By happenstance, I met a man whose son was playing soccer with my daughter. He was head of research at KGI securities (he is now head of research at Cathay Securities HK). We got to talking because our kids were playing football together. I told him I had just increased my investments from USD 90000 to 190000 in the stock market. He told me that in the next 3 months the market will collapse. I took him at his word and went home that day and sold out. That was October 20 2007. To my way of thinking, I didn’t have a very long time horizon for that investment; i.e., I could hold it for a year and get dividends or I could place it into bonds. Within a month the market had collapsed and I benefited. Sold at the top and bought term deposits at 8.5% for 12 months. What he told me on that day was fascinating. It’s Bush. Head of KGI securities research, now Head of Cathay Securities in a no win casual conversation said it was a rake off. He told me that Greece will collapse, Spain, France and Italy will follow. He said they simply don’t have the population. It is a question of demographics and wealth transfer. He was right. I thought his most interesting insight, however, was that it was a contrivance. It was by design. I think you can try to cut that pie anyway you want, but if the head of research at one of the most knowledgeable fund management firms gives you the low-down, you ought listen – after all he has a stake and he was right. So what can one make of that going forward?

Has the US lost all credibility? Is that a well established fact? Can you rely on the good will of the state? I think it is naive in the extreme; yet, they come at you like a ghetto blaster from a Spike Lee movie about how brill things can be. It’s a Spike Lee movie for God’s sake.

Which one? I vote for Clockers, no matter what you do, though you try to be right, they bash you down and laugh at you, until finally when you’re sick and helpless, you get beaten to a pulp. Also that’s the only one I saw I think.

So, what does he say about the future? Any predictions further ahead than 2013?

(I guess we still have the collapse of France to look forward to…)

[quote=“Zla’od”]So, what does he say about the future? Any predictions further ahead than 2013?

(I guess we still have the collapse of France to look forward to…)[/quote]

It was Bush 2 for TG.

He said that it is an issue with changing demographics in Europe. That the aging population from the baby boomers had all the money and banks were going after it. He thought that now would be a good time to go into stocks. He didn’t think we would enter an inflationary period through fiscal spending because ~40% of world credit would evaporate and no amount of government spending would match that.

Read something about Abeconomics not going to make it.

anyway, if it’s by design supposedly by the US government, why would Bush choose a strategy that would put his party out of play for the next 8 years?

[quote=“hansioux”]Read something about Abeconomics not going to make it.

anyway, if it’s by design supposedly by the US government, why would Bush choose a strategy that would put his party out of play for the next 8 years?[/quote]

I’m only telling you what the head of research at Cathay Securities told me.

However, I could speculate. They are in it for the money and accompanying power. Presidential power while extensive and grand is exploitable. It has one resounding foible it is limited to 8 years. That means it is both exploitable and limited. All one really need do to combat its power is have a vision longer than 8 years. Bush was exploiting the presidency by being a stool-pigeon for the real power that stands behind him --James Baker, his father, and the like whose vision of America is global and very long-term. They use the Republican Party. It would be very hard to say they represent it.

People like order and try to find order where there is disorder. We like to think there is a master plan and that intelligent beings are behind things.

In truth most of the time nobody really knows anything. Nobody really has a grasp and things fall off cliffs.

The smart ones can see bits and pieces of the puzzle before they are brought in play. They can only see so much though.

Its still a crap shoot.

Many countries have very big potential financial problems. They are like THE BIG ONE for quakes. When they happen ( possibly not if) its going to be a frickin mess.

There are many underlying issues that can cause big trouble and upset the world financial status quo.

[quote=“tommy525”]People like order and try to find order where there is disorder. We like to think there is a master plan and that intelligent beings are behind things.

In truth most of the time nobody really knows anything. Nobody really has a grasp and things fall off cliffs.

The smart ones can see bits and pieces of the puzzle before they are brought in play. They can only see so much though.

Its still a crap shoot.

Many countries have very big potential financial problems. They are like THE BIG ONE for quakes. When they happen ( possibly not if) its going to be a frickin mess.

There are many underlying issues that can cause big trouble and upset the world financial status quo.[/quote]

Actually, that is not really true. It sounds reasonable, but it isn’t.

There are only a few things that dictate economic success – energy, money supply, security, education, rule of law, and resources. Number 1 is energy, principally its cost and availability.

I am sure the economists and think tankers, researchers and hedge fund hedgers have an excellent grasp of the situation. Its their living being good at what they do.

What’s not so certain, at least to me, is the timing of a predicted set of events.

Many know of an impending collapse of country X finances ,versus country Y, but the exact timing and the severity of the such could be subject to interpretation.

Credibility is seasonal, in my experience.

You can’t rely on the good will of anything. The results of an undertaking are more important than the intentions that motivate them.

But Sowell is the Nietzsche to my Bernard Williams.