Eric Peters: Are We Better Off For Knowing The Truth

Submitted by Eric Peters, CIO of One River Asset Management

"Our company will do everything possible to earn and re-earn trust and confidence,” said Boeing’s CEO, humbled, motivated, forced to face the facts. Data from the two 737 Max 8 black boxes had recorded the tragedies with perfect precision. “The goal is to ensure accidents like these never happen again.”

Across the planet, governments, airlines, and passengers had little doubt Boeing will now fix the problem. That’s the beauty of black boxes. They don’t lie. They don’t betray. They hold no allegiances, ideologies. They simply tell the truth.

Of course, speaking truth to power is exceedingly difficult, and the people who do, take great personal risks. Consequently, most are unusual individuals, complicated, controversial. Assange was arrested on the Ecuadorian embassy steps. Poor Khashoggi left his embassy in pieces. Snowden remains exiled in Russia.

Are we better off for having heard their truths? Depends who you ask. Most people only like to hear truths they already hold dear. And many only hear truths from those they like. They reject truths from those they despise, and often embrace deceits from loved ones.

Which is what paralyses governments when societies become politically polarized. This process is self-reinforcing, driving divided nations toward crisis, conflict. At which point, the overwhelming majority return to their senses, forced to face the black box truth of their undeniable reality.

Understanding central banking is even more complex, because it’s not clear that there is an immutable truth. And financial markets are hardest of all. Because no sooner does something appear unambiguously true, then the collective market conscience betrays the believers.

And what appears true today is that central bankers are in firm control, suppressing volatility, elevating valuations. Yet it is also true that the last time inequality hit these heights was in the late 1920s. And the last time bond and FX volatility touched this low was the 1960s. On the eves of two great upheavals.

Prayer

“One thing that the British and Germans have in common is that they believe you should repay your debts,” said the political advisor, crisscrossing Europe in a determined search for a solution. “Imagine a European map, you have this line that divides north and south. And if you remove the British from the northern hemisphere, then the southerners dominate the union,” he said. “If the British leave - which they most certainly will - then the Germans will always get outvoted by the southerners on matters of money.”

“When I meet with German leaders, they complain bitterly about the Italians,” continued the political advisor. “They say Italians do not follow rules, they’re dishonest, they game the system, they manipulate the ECB to their advantage,” he said, pressing his palms together in prayer. “And when I speak with leaders in Rome they complain bitterly about the Germans, their deceit, their manipulation of the ECB to subjugate the Italian people.” And he slid his hands back and forth, in opposite directions. “They’re all talking past one another."