Minyan Mailbag-Our Government
Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.
Tony Dwyer's note about the U.S. democracy is absolutely correct, but it is not what the founding fathers framed in the Constitution because it leads exactly to the outcome (polarization) that Stephen Roach has aptly described. The founders specifically created a constitutional republic with a (non-fiat) currency backed by gold and silver, NOT a democracy, to prevent exactly the situation the U.S. finds itself in today where two candidates promise fiscal fantasies to their constituencies who collectively spent over $1 billion for the privilege to control the power of the printing press and public treasury and run up the massive national debts ($7.4 trillion with no end in sight) to levels that can never possibly be repaid.
This will continue until it suddenly comes to an end. Tell me when that day is and I will buy you a ticket for a 7-day Caribbean vacation. Until then, the bulls can drink the liquidity drink as the bears suffer the indignity of cautioning against the very things our founding fathers put safeguards in place from which to protect us. While the right to vote is still a wonderful privilege for Americans, Mr. Roach's polarized America can only be expected to intensify in this form of social democracy until the U.S. currency's eventual demise ultimately results in the American body politics' painful realization that this type of "to-the- victors-go-the-spoils" democracy is unsustainable and forces the American public to demand that its elected representatives restore the constitutional republic based on fiscal discipline and sound money that our visionary Founders created. Don't try explaining this to many people unless you want to suffer through endless frustration.
There was a scene in The American President when Michael J. Fox stood in the Oval Office and said "....because he's MY president, and in this country, it's not only our right to question our elected officials--it's our responsibility." At some point between the last election and now, that assertation has become taboo. Perhaps those conversations are perceived as an affront to our troops overseas--I don't know--but the emotional tension has crowded that topic out of social dialogue.
The truth is that it won't matter until it does. It didn't in 1999 or 2003 and it may not matter till 2005 (or beyond). I've long said that two tapes simultaneously exist--a bull market and a bear market--and the residue from that friction dictates what we read in the rags the next morning. While we can rationalize our debt (the war), we can't ignore it forever. The ramifications may trickle (the dollar) or prick (the bubble) but when it finally manifests, the focus will shift to the ursine influences.
Reactive rationalization won't help proactive positioning and therein lies our task at hand. If you're early (to sell) and miss a move, you're labeled as a nervous Nellie. If you get caught holding the bag, you clearly didn't see the troubling writing scribbled on the wall. Trading, in its purest form, is capturing the disconnect between perception and reality and that interpretation is what keeps us coming back for more. I will simply suggest that you try and juxtapose your time horizon with your time horizon and allow for a margin of error. For if we've learned anything, JB, it's that we're all just pawns in a very minxy picture.
Peace (and sorry for your Cards),
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