investing in the age of soverei - peter t. treadway

[...]... he called the financial instability hypothesis, or FIH Under the FIH, the financial system would be dominated by debt-financed asset bubbles, including real estate, which would eventually crash and bring about the insolvency of both the banking system that financed them and the borrowers themselves Minsky therefore believed the financial system was inherently unstable and that humans had an incurable... fiscal probity In the private sector, the unions and management bargain They each pursue their own objectives Neither is obligated to the other The unions don’t appoint management, at least in most countries The issue of contention is the share of profits of a company, to which the workers have certainly contributed Not so with the public sector In the public sector, well-organized and well-financed unions... The issue of the less-affluent voting to take wealth and income of the affluent was very much on the minds of America’s founding fathers James Madison, known as the Father of the American Constitution, wrote the following in 1787: The right of suffrage is a fundamental Article in Republican Constitutions The regulation of it is, at the same time, a task of peculiar delicacy Allow the right exclusively... will make investing so difficult Nobody is going to ring a bell when the world flips from the current deflation to inflation This “flip” could be years off It could be next year Right now, the world seems in oversupply on mostly everything The Chinas, the Indias, the Brazils of the world are turning out a plethora of goods in a globalized economy that is benefiting from technology-driven increased... no children is overwhelming when looked at from the cold viewpoint of economic self-interest Dogs the universal child substitute—don’t contribute to taxes or funding entitlements The linkage between the need to have children and survival has been broken in the minds of the average person But not in reality Children are still necessary for the survival of nations and the funding of retirement programs... inequality does not seem to rest on the theory that the affluent have gained by cheating or exploiting the less affluent Even if the affluent have earned their money honestly, somehow this is “unfair.” The investor class is the one that is likely to be the object of envy for the rest of the population It is probable that in the coming age of sovereign defaults, the investor class will become an easy political... found in classical Greece In the sixth century BCE, the Athenian lawmaker Solon instituted a set of laws called seisachtheia, which canceled all debts What a fine role model for the current Greek rulers, whose nation is completely bankrupt and will be, in our opinion, one of the first in a long line of countries forming a new wave of sovereign defaulters Interestingly, there are no such tales of debt... latter be so in case of a suffrage confined to the holders of property?11 The affluent—persons of property, in Madison’s terms of course resist Their greater wealth and income gives them an influence on public policy disproportionate to their numbers One way of resisting is to make sure some of the redistribution is directed back to themselves The entire system of US farm supports, including ethanol... dismantling the welfare state and its overbearing taxes and regulations and reducing unpayable obligations by defaults This may seem like a contradiction, but certain types of defaults—particularly in the entitlements areas but also on sovereign debts—may be part of the reform process Chapter 7 gets to the theme raised by the title of the book investing in an age of sovereign defaults A review of various... create the illusion that children and families are not as necessary for economic survival as they were in the past The fatal attraction of populism has created the programs The programs have undermined the demographic base on which they depend The birth dearth in advanced nations is not good news for the future funding of pay-as-you-go entitlement programs The reality is that the so-called investor . is written for both institutional investors and for private investors who think they are affluent today but must live off their investments. Investing is never easy, but in times of historically. society. Yes, they were so dead-white-male and uncool in their attitudes. But they worried that in a democracy the less-affluent majority would vote to confiscate the property of the affluent minority birthrates are the culprits. Chapter 6 attempts an overall look at the trends affecting the current investment climate. Several things stand out. So far, the massive money printing implied by the various