Hedge Fund Billionaire Slams Democracy, Says The "Tyranny Of The Majority Is An Unhealthy Development"Submitted by Tyler Durden on 05/27/2016 14:38 -0400
In his latest letter to investors, OakTree Capital's Howard Marks goes political (slamming Trump's tariffs and Bernie's minimum wage machinations), shedding some blinding light on the economic reality of America, the dismal failure (and increasing impotence) of central bankers, and the ongoing "tryanny of the majority" warning that if everyone wants to tax-the-rich, soon there will be no rich to tax. As he concludes, short-term fixes simply cannot create wealth out of thin air (see Venezuela), as Churchill once said "for a nation to try to tax [or stimulate or devalue] itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."
In 1922, Germany was up to its eyes in debt, to the point that it was beyond repayment. The government, in attempting to overcome the dire poverty that had developed, decided to print more paper banknotes. The printing didn’t (and couldn’t) solve the problem, so they printed more. Then more again... The reader may say to himself, “When will people learn?” Sadly, they don’t. Incredibly, when the reichsmark collapsed in 1923, no one blamed the excessive printing. In fact, many people felt that if only the printing had continued just a bit longer, everything might have been all right. What we can take away from this is that what happened in Weimar Germany in 1922–1923 is happening now in Venezuela in 2016. (And has happened in some twenty other countries over the last hundred years, most recently in Argentina in 2000 and in Zimbabwe in 2008.) The same will occur in Europe and America in the fairly near future.
Not only does Hillary Clinton insist that social security benefits are sacrosanct and actually need to be increased, along with lowering the Medicare age to 50 years, she also insists that Washington remain the world’s policeman and imperial hegemon. In a word, a Clinton presidency would mean Big Government on both sides of the Potomac - a combined Warfare State and Welfare State that would positively bankrupt the nation during the next decade.
ABC, Fox News, and Rasmussen now have polls suggesting Donald Trump leads Hillary Clinton nationally and for the first time during this campaign RealClearPolitics 'tracker' has Trump with a 0.2pt lead - the unofficial "death cross" of Clinton's campaign as Wayne Allyn Root right remarks "Hillary is sinking faster than the Titanic." Voters are putting their money where their polls are too as bookies odds of a Hillary victory in November are tumbling.
There is perhaps no other area where the tunnel-vision, hypocrisy, and corruption of the U.S. media is more visible than with respect to its nearly incessant China-bashing. Previous commentaries have exposed such vacuous drivel again and again and again. Admittedly, the numbers involved should give any sober individual cause for concern. They are an obvious symptom of the global phenomenon of worthless, paper currencies being used to pump-up, manipulate, and destabilize our markets – to a degree never before seen in the history of our species. However, singling out China’s markets as being “prone to bubbles” represents hypocritical blindness on the part of the U.S. media which is too absurd to be accidental.
Once again the Chicken Littles of the U.S. mainstream media are “warning us” that the sky could fall, because of “bubbles in China”. Somehow, all of the U.S.’s gigantic/precarious bubbles are completely invisible to these Chicken Littles. Whose bubbles are bigger? Whose bubbles are worse? The answer could not be more obvious.
You have to love it when one of Donald Trump’s wild pitches sends the beltway hypocrites into high dudgeon. But his rumination about negotiating a discount on the Federal debt was priceless. No sooner did the 'unschooled' Trump mention out loud what is already the official policy of the US government than a beltway chorus of fiscal house wreckers commenced screaming like banshees about the sanctity of Uncle Sam’s credit promises.
The establishment (and its mainstream media mouthpieces) proclaim that "confidence" is being threatened because Donald Trump has told the truth that the Federal debt is on a track toward unmanageability and default. Yes, Uncle Sam’s credit standing is in deep trouble and the Fed is heading for a monetary calamity. But these untoward prospects have nothing to do with a couple of alleged wild pitches from Donald Trump. Upon closer examination, it is evident that the Donald was actually right on the money.
For decades, this country has see-sawed between the long tenures of two Deep State errand boys from each major party, putting both parties in such a bad odor that Trump now rises on their mephitic fumes. Hillary Clinton, of course, is the Deep State incarnate, which is the real reason so few citizens trust her. Every poor schnook getting shaken down for a $90,000 appendectomy bill looks at Hillary and knows exactly what she represents. Voters seem attracted to Trump because he’s so eager to give the finger to the Deep State. It deserves the finger, but it also needs to be carefully disassembled without blowing up what remains of this country.
When it comes to the economic future, a Trump presidency could bring either a shitstorm or salvation. Regrettably, the odds of the former are immensely the higher. That’s because Trump is a welcome, but extremely unguided missile.
Calling himself 'the king of debt' in his business dealings, Donald Trump warned correctly this morning that the national debt would be troublesome if the cost of borrowing increases, asking rhetorically, "we're paying a very low interest rate. What happens if that interest rate goes up 2, 3, 4 points? ...We don't have a country." The U.S. should "renegotiate longer-term debt," he added rather shockingly to the CNBC anchors, and with the recent surge in US Treasury default risk (now at 3-month highs), it appears the market is growing more nervous also.
First there were seventeen. At length, there was one. Donald Trump’s wildly improbable capture of the GOP nomination, therefore, is the most significant upheaval in American politics since Ronald Reagan. And the proximate cause is essentially the same. Like back then, an era of drastic bipartisan mis-governance has finally generated an electoral impulse to sweep out the stables.
Despite the recent comparisons, Donald Trump and Ronald Reagan are very different when it comes to experience and views on fiscal policy.
If an economic system collapses in the woods and no one is paying attention, are there any consequences outside the woods? Well, yes, of course. As with most situations financial and global, however, consequences are not usually taken very seriously until they have spawned a vast bog of sewage we all have to then swim through. The issue is and always will be “interdependency,” and the dissolution of sovereign borders. The European Union dynamic, for example, can only end in one of two ways - the complete dismantling of the supranational body and a return to sovereignty, or, a socio-economic crisis followed by even more centralization and the end of all remnants of sovereignty. Either way, the consequences will not be pretty. The same strategy may also be used in the Western hemisphere; more specifically, the collapse in South America that almost no one in the mainstream seems to be paying much attention to.
If the world’s economies were really out of intensive care, why would ultra-radical monetary policies like helicopter money be increasingly debated at the highest level of governments? Also, how come 70% of Americans believe the US economy is on the wrong course? And why do almost half of US citizens admit they couldn’t come up with $400 to meet an unexpected need? Yes, I know why ask why? And it is what is, and a bunch of other clichés. But this isn’t normal, it isn’t healthy, and - at least in the opinion of this author—it isn’t going to end well.