Mark Twain said “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Clearly, it’s not a problem we have to confront too often but then, our job is to invest prudently over the long term and not chase moonbeams by confusing clients’ capital with roulette chips. For that reason, we’re more than happy to be in the minority who look at the current economic situation and see plenty of nasties lurking in the woodshed. Reckless government borrowing, staggering fiscal deficits and the printing of Toytown money lead to furrows in our collective brow. You could almost say it worries us; not, perhaps, to the same degree as standing next to Shakin’ Stevens in the gents but it’s a cause for concern, nonetheless.
The easier monetary policy gets (and let’s be realistic, with base rate at a 300 year low of half a percent, it cannot get much easier), the more money is mis-allocated, mis-spent and mis-invested. Too many projects look attractive when money is artificially cheap, only to become less so when brutal reality intrudes. Long term prosperity will not result from ‘hair of the dog’ economic policies that can only deliver another sugar rush to a broken consumption based economy.
Talking of long term prosperity, relying on the smoke and mirrors of a bloated financial sector has proven to be an error. There was a time when stockmarkets were the servants of industry and commerce but regrettably, it’s now the other way round. Which neatly brings us to some curious comments by Lloyd Blankfein, Chief Executive of Goldman Sachs. Mr Blankfein implied the firm wasn’t just trying to make money; it was doing “God’s work”. Now, God may well move in mysterious ways but adopting the guise of investment banking was close to the bottom of our list of possibilities.
Goldman Sachs is the most prestigious investment bank on the planet and like any successful organisation it attracts more than its fair share of criticism. No doubt, some of it is motivated by jealousy but even the mighty house of Goldman makes mistakes. It is fair to point out that it took part in the US government’s Troubled Asset Relief Programme (TARP), was a major beneficiary of the government backed rescue of AIG and Mr Blankfein himself apologised for the firm’s role in some of the activities that precipitated the financial crisis. “We participated in things that were clearly wrong and have reason to regret.” Mmmm… profound stuff indeed.
All the stranger, then, that reference to the work of the Almighty is made against a background of mea culpa. Those possessing a more cynical nature might conclude the confessional is merely a PR stunt to deflect attention from the enormous bonuses paid out so soon after accepting government assistance. However, we conclude by asking just how much credence there is to Mr Blankfein’s claim that he is working for God? Well, in our humble opinion, it’s clearly ridiculous. Firstly, it’s in very poor taste and secondly, we doubt God could afford to hire him.
John Newsome can be contacted on: 01423 705123 or email:john.newsome@williams-im.com
