 | | The Daily Reckoning | Tuesday, October 25, 2011 |
- The unveiling of Addison’s “Project X” just hours away...
- The overwhelming cost of governments’ “Do Something” attitude,
- Plus, Bill Bonner...lost...somewhere...in...Cyprus...
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|  | | | Some Advanced Info on “Project X” | |  | | Joel Bowman |
From Buenos Aires, Argentina...
We have a special announcement before diving into today’s usual musings, Fellow Reckoner. As you’ve probably heard, there’s been a curious commotion around the office of late, and far more rumors swirling around the office water cooler than usual.
It’s all related to a secretive new project Addison has been working on for years... Something he’s mysteriously labeled “Project X.”
You’ll receive a message directly from him regarding this top secret project later tonight, but first, here’s a special note from Addison himself we managed to get our hands on... in order to let you know a little bit more about where we stand with the project...
 | | Addison Wiggin |
Dear Daily Reckoning Reader,
First of all, my apologies for all the secrecy, but it’s critical that we get this just right.
After all, there’s a lot riding on what you think of our new project...one I’ve been working on for six years now.
Unfortunately, I can’t reveal the name of it just yet...so for the moment let’s call it “Project X.”
The project is bigger than my book The Demise of the Dollar...and the two I co-wrote with Bill Bonner, Financial Reckoning Day and Empire of Debt.
It’s even bigger than my Sundance accepted documentary, I.O.U.S.A.
And provided everything goes off without a hitch, “Project X” could not only change the way you look at the world, it could revolutionize the way you invest, build new wealth, fund your retirement and even provide for your family.
To say I’m a little nervous would be an understatement.
There have been no less than 27 people involved in building and organizing this new venture. The team includes our founder, Bill Bonner; our team of in-house legal experts; the CEO and CFO of Agora Inc.; an entirely new affiliate to the Agora family of companies; programmers, marketers, publishers; and the panoply of writers and thinkers you’ve come to rely on in here in The Daily Reckoning.
In fact, many of us have been working on “Project X” in secret.
It would be hard to even count the number of hours that have already been thrown at it. Or the number of air miles we’ve logged to pull it off. Members of our own staff have even been wondering what we’re up to...
We’ll formally take the wraps off it later tonight. Keep an eye on your email inbox for instructions on receiving your invitation.
As I mentioned above, I can’t reveal what “Project X” is just yet. But I can tell you what it is not: It’s not the Apogee Advisory or any new newsletter. It’s not a book. It’s not a conference, symposium or cruise. It’s not a new email service...or even a new documentary film.
Fact is, it’s not like anything we’ve ever done.
But with our sincerest intentions it will allow you to independently — and confidently — build lasting wealth for you and your family. And I’m thrilled “Project X” is so close to being launched.
Again, I apologize for the secrecy. There is a lot riding on this venture...and I want to make sure everything is just right before we unveil “Project X” a few hours from now.
Cheers,
Addison Wiggin
for The Daily Reckoning
P.S. You get dibs! As you’re already a subscriber to at least one Agora Financial service, you’re first in line to gain access to “Project X.” Please watch your inbox... We’ll let you know how to receive your invitation later this evening.
| | |
| | The Daily Reckoning Presents | | Pea Shooters, Elephants and Government “Solutions” | |  | | Eric Fry |
“Do something” is fast-becoming the recurring whine of most financial market commentary. In fact, “Do something” is fast- becoming the recurring whine of almost all socio-economic expression in the Western World.
From the rioters in Greece, to the Occupiers on Wall Street, to the long-term unemployed of America’s big cities, to the underwater homeowners of America’s small towns to the heavily indebted college grads nationwide; the desperate citizens of the Western World are turning to their governments and shouting, “Do something!”
Reacting to these pleas, the governments are attempting to do something, even though doing something is what brought us to this lamentable situation in the first place. In general, governments are attempting to overturn the eternal relationship between risk and reward. They are attempting to salve every economic wound, especially those that are self-inflicted.
A little bit of government-sponsored triage might be okay, perhaps even helpful. Unemployment insurance, for example, might fall into that category. But when the government begins mobilizing monetary M.A.S.H. units to rescue the bankers and/or governments who blew themselves apart by holding campfires in a munitions depot, the rescue effort has gone too far...way too far.
Traditionally, capitalistic societies regarded failure as an unfortunate, but normal, part of the economic process. Therefore, capitalistic societies would routinely ignore most victims of the capitalistic process, even innocent, collateral victims. The process was Darwinian, but very effective in sustaining long-term economic growth. So the modern idea of funneling taxpayer dollars to entities or individuals whose incompetence deserved failure would have been unthinkable...even anathema!
But today, the ancient idea of allowing capitalism to determine winners and losers, rather than the government, is equally unthinkable...and anathema!
As a consequence, every taxpayer in the West is in the failure- subsidy business, and every failing institution and struggling individual is in the begging business. Ironically, therefore, both self-determination and self-reliance have perished by the same sword.
The governments of the West have come to see themselves as a financial Army Corps of Engineers — overpowering the course of nature with brute force. They respond to short-term crises with powerful, overly engineered “solutions,” without ever really considering the long-term harm these solutions may produce. Sure, the river doesn’t flood when you transform every oxbow into a concrete storm drain. But diverting nutrient-rich silt away from farmland and into the sea is not exactly progress.
Nevertheless, governments throughout the West continue building their storm drains. They continue to divert essential nutrients away from the private sector and pour them into a bottomless sea of bankrupt governments and failing too-big-to-fail enterprises. In other words, the governments of the West continue to “do more,” when “less” would work just fine.
The biggest problem with doing more is that it invites all citizens to do less.
Both the rich and poor learn to reach for a handout. The politically connected elite beseech the government’s assistance as furtively as the dispossessed ranks of the unemployed. Just ask Goldman’s Lloyd Blankfein or JP Morgan’s Jamie Dimon or GM’s Rick Wagoner or any of the other CEOs who trekked to Washington during the 2008 crisis to beg for a handout from Uncle Sam.
Or ask Charlie Munger, Vice Chairman of Berkshire Hathaway.
While his sidekick, Warren Buffett, is busy making headlines — and fanning the flames of class warfare — by “complaining” that his taxes are too low, Charlie, as well as Warren, is continuously advocating government intercession in places where intercession could add billions more to his net worth (and Warren’s).
Just yesterday, Munger was urging the governments of Europe to “do more.”
“They are way behind the curve,” said the folksy billionaire. “They have to stop shooting at this elephant with a pea shooter.”
Really, Charlie? Why is that? Do the governments of Europe have to do more because capitalism would fail without their wise, guiding hand? Or do the governments of Europe have to do more to rescue a few “at risk” portions of Berkshire’s investment portfolio?
In an earlier, simpler time, when Berkshire Hathaway was not holding large euro exposure and was not shorting naked put options on the Emerging Markets, Munger and Buffett would routinely advocate “small government.”
Said Buffet: I think the most important factor in getting out of the recession actually is just the regenerative capacity of American capitalism.
Said Munger: The smart way to regulate is to act like a referee. You have to curtail the activities that are permitted. There should be less trying to fix things and more trying to prevent bad outcomes.
Agreed.
So why not resume trusting “the regenerative capacity of American capitalism” and stop “trying to fix things?”
Even if Berkshire Hathaway holds very large positions that would suffer very large losses in the event of a severe euro crisis, is it the responsibility of government to make those bad bets good?
Aren’t Warren Buffett and Charlie Munger the quintessential American capitalists? Didn’t they make tens of billions of dollars betting on the lightly regulated American enterprises of the ’60s, ’70s and ’80s?
So if “small government” enabled these two billionaires to make their billions, why would “big government” be desirable today? Doesn’t the next generation of capitalists deserve the same relatively fair, honest and lightly regulated environment that enabled Buffett and Munger to make their billions?
Or to put it another way, don’t Buffett and Munger deserve the opportunity to losesome of their billions in the exact same manner in which they made them? Don’t they deserve to lose billions from making bad bets, just like they made billions by making good bets?
So whatever the configuration of Berkshire’s investment portfolio, the rules of the game need not change. Which brings us back to Munger’s remark about shooting an elephant with a pea shooter...
A certain girl in my 10th grade French class sometimes wore a certain dress that made it slightly more challenging for her male classmates to focus on conjugating “aller” and “avoir” (but much easier to conjugate “aimer”). The dress had a phrase on it that became shorter and shorter — by one word each time — as it worked its way down her dress. The phrase went like this:
Oh please don’t touch me there!
Oh please don’t touch me!
Oh please don’t touch!
Oh please don’t!
Oh please!
Oh!
I didn’t learn a whole lot of French in that classroom — teacher’s fault, not the dress — but I did learn a little something about the power of the written word...and of the word that is not written.
So if we play a similar game with Munger’s phrase about en elephant and a pea shooter, we end up with the comment that the enterprising, capitalistic Munger of decades ago might have made...rather than the one he actually made:
They have to stop shooting at this elephant with a pea shooter
They have to stop shooting at this elephant with a pea
They have to stop shooting at this elephant
They have to stop shooting
They have to stop
That’s right, Charlie. They have to stop.
If Western capitalism is to resume flourishing, Western governments have to stop. Stop their meddling; stop their fixing; stop their rescuing; stop their storm-drain building.
Let the floodwaters flow. That’s what makes the grain grow.
Regards,
Eric Fry
for The Daily Reckoning
| | | | Why the warning behind this image could... |
“Forever change the way you think about the stock market...
Open your eyes to what you can and can’t expect from the United States government...
And even change the ease at which you’re able to buy and sell things...
Click the image play button to first learn the warning...and some simple ways to prepare for the uncertain times ahead.
|
| | | And now over to Bill Bonner with the rest of today’s reckoning from...Wait! Where’s Bill?
| | Our Reckoner-in-Chief was last seen in Cyprus, digging around the resting place of Solon.
“Whether or not the great Greek lawgiver died in Cyprus or not is a matter of some dispute,” wrote Bill in yesterday’s issue. “But Herodotus says his body was ‘consumed in Cyprian fire.’ So this is the place he must have gone back to ash.”
What happened to Solon? Why does it matter? And where on earth is Bill?
On all three accounts, we have no idea...but we’ll let you know what Mr. Bonner finds on his travels when he returns...
Regards,
Joel Bowman,
for The Daily Reckoning |
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