This morning…our fingers froze at the keyboard. We were suddenly struck by an irony so immense we could scarcely breathe, let alone type. Or else it was a hangover. We had to loosen our collar…sit back…and relax for a minute.
The world seems to be in the grip of three immense frenzies at once, we realised. Each one is breathtaking. Each one is awe-inspiring. And each one is a monumental humbug. Each part of this hysterical trinity has tres partes of its own…one part truth…one part lie…and one part complete absurdity. And each one supports the other, reinforcing one delusion with another, even bigger one.
In the New World, a recent poll showed that Americans thought the war on terror was the single most important issue on the planet. While back in the Old World, a similar question drew a different reply: it is global warming that the Europeans worry about. Meanwhile, all over the world, from Manchester to Mandalay, everyone believes he can get rich without working; all he has to do is to buy a financial asset and watch it go up in price.
It is this last fantasy that interests us most, here at the Markets and Money headquarters. Every sentient being on earth seems to have come to believe that it is money that matters most…and the way to get money is to speculate. Asset prices only go up, he believes. And each one believes he has some special gift that permits him to choose the one that goes up most. Seeing neither error nor risk in this proposition, he then proceeds to leverage himself – borrowing money either for consumption (Americans) or speculation (Chinese) so that he can take advantage of it.
What results is a huge splurge of spending – on consumption in North America…and capital investment in Asia. This frenzy of activity, of course, brings about a huge increase in the consumption of resources – notably oil.
Meanwhile, a hypothesis has conveniently arisen: Increased usage of fossil fuels raises the worlds CO2 levels…trapping heat. The authorities, naturally, rush to ‘save the planet,’ conveniently alarmed by the plight of polar bears and penguins. How can they help? They can raise taxes! Yes, global warming is to be remedied by a global tax on fuel, so as to raise prices and discourage users. Who will collect and redistribute the tax? If you guessed the Girl Scouts or the Kiwanis Clubs you are a naïve moron. The tax will be collected by governments, the largest of which is also the largest user of fossil fuel…and the greatest contributor to the alleged danger.
Markets and Money