Market Commentary

“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer” – Adam Smith (the Wealth of Nations).

When you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favours—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed. – Ayn Rand; Atlas Shrugged, 1957 The title of this post is a reference to a book published in 2001 that reflects on the experiences of 6 writers of the 20th Century, who became adherents of and ultimately disillusioned with, Communism. It is ironic that much the same can now be said of Capitalism; at the very least it appears to be having a mid-life crisis.

“Some calamities – the 1929 stock market crash, Pearl Harbor, 9/11 – have come like summer lightning, as bolts from the blue. The looming crisis of….. the demographics of an aging population, its causes, timing and scope are known”. George Will – Political Commentator for the Washington Post, NBC et al. Over the next decade or so, the Developed World faces the prospect of their populations shrinking at an increasingly fast rate, whilst at the same time the Developing World is seeing continued strong rises in fertility. This fascinating website shows it all in real time, (well not exactly in real time but you get the drift).

Following on from the famous quote that Helen of Troy’s was the face that “launched a thousand ships”, Isaac Asimov, the science fiction writer claimed to have invented a new measurement unit, the millihelen, which corresponds to the beauty required to launch one ship. The Times newspaper this week pointed out that, as per a letter to the New Scientist as far back as 1959, the inverse also applies; -1 millihelen would be enough to sink one. There has been much market angst recently over the rise of inflation, as bond prices have fallen, raising yields which in turn has put equities on edge. But would a rise in interest rates actually be the -1 millihelen necessary to sink the economy?

“The best way to destroy the Capitalist System is to debauch the currency” – V.I. Lenin…

“Alice laughed: “There’s no use trying,” she said; “one can’t believe impossible things.” “I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.” – Alice in Wonderland.

“And a step backward, after making a wrong turn, is a step in the right direction.” ― Kurt Vonnegut Jr.

“A bubble is a bull market in which you don’t have a position.” – Eddy Elfenbein, (via Twitter). “The trouble with quotes on the internet is that it’s difficult to determine whether or not they are genuine” -Abraham Lincoln