When I left France for the US in 1972, as it turned out never to come
back, I packed a poster of the north wall of the Eiger and a copy of my favorite
book of all times: Ernst Jünger “ Sur les
Falaises de Marbre”[1].
This extraordinary book
recalls the last days in an imaginary land before its invasion and
destruction at the hands of the Great Forester, a cunning and ruthless tyrant
who lived in the vast forests nearby. Jünger
started his book while staying in a small town on the shore of Lake
Constance. Years later while on a
vacation, I visited picturesque Meersburg and Lindau, drove through the rolling
hills behind Hagnau and watched the sun set over the snowy peaks of the Alps beyond
the shimmering lake, and memories of the book and its magic rushed back to my mind.
Some have said it was a
criticism of Stalinism, others of Nazism.
It certainly was a paean to freedom, to what makes life in harmony with friends,
neighbors and nature so precious, and how quickly we can lose these and how
painful it then is.
I don’t believe that we are
living on the banks of Jünger’s vast Marina.
But I do feel that we are in danger of slipping into a period of greater
tension, greater division and failure to address our most pressing
problems. Before too long, and unless we
regain our senses, the time for a Great Forester could arrive.
For many reasons, we are left
with four candidates to the presidency: a populist and demagogue and Forester
apprentice, an aging career politician with truth telling issues, an ex pot
entrepreneur, and an activist who spray-paints bulldozers of companies she
disapproves of (sadly, the Democrat, Republican and Green VP candidates are
probably better than the top of their tickets).
It is difficult to imagine
how any of these candidates could unite the country. Hillary Clinton is probably the one more
likely to try and build consensus because she is the one who most lacks a
committed base, but can she bridge the trust gap?
Meanwhile, Americans are more
divided than they have been in decades.
It is both ironic and sad that they were most united when President
Obama took office in 2008.
Responsibility for this can be spread wide, and because of that,
redemption will be hard to reach: Tea Party extremists unwilling to compromise,
main stream Republicans unable to deal with them and the opposition, Democrats
in Congress and the White House enamored with diktat and income redistribution
without GDP growth; most of all, politicians deaf to popular angst and
aspirations.
Against this dreary political
background, the economy and the financial markets have been operating with a
high degree of wariness, where extreme monetary policies have attempted to
offset the absence of fiscal reforms and pro-growth policies. The fix has carried increasing risks:
financial assets are overpriced, public pension funds are hugely under water,
the insurance industry is at risk and even consumption is threatened by the
need for households to save more when 10 year Treasurys yield a meager 1.7% p.a.
So we have a divided
political class, a divided nation, a subpar economy and stretched financial
markets. I might add that the same
combination of slow growth and excessive indebtedness is pressuring governments
and traditional parties and giving openings to populists of all kinds around
the world.
As an investor, I would think
that prudence is in order. Sure, stocks
are not as expensive as bonds, but does that make them attractive, as a
class? Not really. There is nothing wrong in keeping stocks of
steady performing companies, or in buying into carefully chosen turnarounds. But if one keeps a large exposure to
equities, buying some protection seems advisable to me.
Alternatively, cash does look
like a good temporary alternative.
Another one is real estate.
History shows that people and
countries don’t change until they have to.
In America, I don’t think we have reached that point, nor do I see
anyone able to mobilize the nation. History
has also shown that it takes time for a large country or economy to change
direction.
Caveat emptor!
No comments:
Post a Comment