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Nominated for the Lorenzo Natali Prize
Dirty Harry’s verdict: The Colour of Romney
“This Seat’s Taken.”
So there you have it folks. The US elections are over for another four
years, and we now know that America has chosen Barack Obama to lead them for
another term. But are we any closer to truly discovering the true colours of
money… remember it could have been Romney. The way his campaign was going at
times it looked like he could not even spell the word ‘tax’!
Perhaps the Republican Convention was hoping to move on from the Romney
family’s Spelling Bee shortcomings when Clint Eastwood hit the stage to
deliver his endorsement. What was he going to say? ‘Go ahead Mitt, make my
day’ or ‘It’s ‘bout time this town had a new Sheriff…’ or ‘Vote Romney/Ryan
if you wanna save a fistful of dollars’?
No. Nothing nearly so coherent - Eastwood spent 12 minutes having a
monologue conversation between himself and President Obama, represented by
an empty chair just to the left of Eastwood’s rostrum. What had meant to be
a party-piece live on national TV turned out to be so embarrassing that it
was completely edited out of the party’s own video hagiography of the
Meanwhile, the most serious issue facing America in January remains the
Fiscal Cliff with the attendant and inevitable GDP contraction that comes
with it. As long term readers of this column know, for the last dozen or so
years we have been making the point that the US economy has not actually
experienced any GDP growth - merely higher levels of mal-investment activity
paid for entirely by higher borrowing. Take away the annual debt increase
and the reality of it all is that the US has been in recession for most of
the last decade. The unsustainability of that kind of ‘growth’ is now coming
home to roost.
The choice facing the American President in 2013 is whether to have the
strength of character to both increase taxes and cut spending thus sparking
the biggest depression since the 1930s or to simply ‘kick the can’ further
down the road in the hope that this trick can be repeated for the next four
years and then blame the next guy. Anyone who cares about America would do
the former - a politician will probably do the latter.
As one of my favourite financial gurus, Marc Faber, observed before knowing
the result of the Presidential election, ‘Put a gun to my head and tell me
to choose between Obama and Romney and I’d say…. “Pull the trigger please”’.
There are plenty of reasons to be bearish on the US economy. The problems
are profound and structural. The experience of the 1930s taught us to
realize that neither politicians nor central bankers can perform the
economic miracles they believe that they are able to. Our believing they
can, only leads to disappointment for voters and ridicule for the failed
In response to Clint, the President later released the above photograph with
the caption - “This Seat’s Taken” - a response which contained all the
merciful brevity that Clint’s ramble lacked. However, the importance of who
is sitting there is undoubtedly hugely overstated. The issue of the
depressionary debt burden is far more significant than who is actually
POTUS. It is vaguely possible that the outcome may somehow turn out to be
Good or Bad but in every scenario I can envisage it is most likely to be
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Graham Macdonald on [email protected]