This time last year, I’ll be honest with you, I thought the only option was to sell everything, buy gold, silver and ammo, take to the hills and try to hold out till it all blew over.
But I was wrong. As you might have noticed – (telltale signs: your house hasn’t been burned down; there are no marauding gangs trying to steal your secret stash of baked beans; the cashpoints still work; you haven’t yet been forced to eat your pets) – the “it” hasn’t yet happened. Instead it has been pretty much business as usual: another year of money-printing; of economic stagnation; and of near-total denial by our political class of the epic scale of the problem we face.
As an example of the latter, I give you gay marriage. Personally, I’m agin. This isn’t because I don’t have lots of gay friends whom I love very much. (I do: and, incidentally, they all share – to a man – my views on gay marriage) Rather, it’s that it represents yet another attempt by the State to stick its tentacles where it has no business. Homosexual couples already have exactly the same rights and protections under law as heterosexual ones. (And rightly so). But if churches, or other non-state institutions, don’t wish to “move with the times” that should be up to them. No more do I believe the Catholic church should be compelled to recognise gay marriage or an evangelical Christian B & B to allow gay couples – even married gay couples – to share a room than I believe that your favourite neighbourhood club with the hoist in the back room should be forced to admit heterosexuals.
That’s just me, though, wearing my libertarian purist hat. I’m quite sure there are some compelling arguments in the other direction, but that’s not really my point.
My point is that for David Cameron to be wasting parliamentary time on the immeasurably trivial gay marriage issue is a bit like Winston Churchill, on the eve of the Battle of Britain, deciding to push forward a vital new parliamentary bill banning the practice of docking tails on pedigree dogs.
It’s silly, it’s irresponsible, it’s dishonest. It smacks of the image-over-content approach to politics that was tested to destruction in the Blair era. Our country deserves better than this in what is most certainly its darkest hour since at least the early 1940s.
So what should the government be doing instead of worrying about gay marriage? Well, seriously addressing the deficit would be the first thing. And then, obviously, the debt. As we’ve just seen from his lacklustre Autumn statement, the Chancellor simply hasn’t the cojones to do this. Which means that our best hope, under the current political plan, is decades of Japanese-style stagnation. But which also increases the likelihood of the doomsday scenario I vaguely outlined at the beginning. Just because it hasn’t happened yet doesn’t mean it won’t.
Last week, I attended the dinner of an exclusive investment fund, run on Austrian lines, heavily weighted towards gold, and which for the last decade has massively outperformed almost every other fund, including Warren Buffett’s, by a country mile.
Why has it been so successful? Because its philosophy is much the same as Bogpaper’s: it believes that the best way of ensuring the most effective – and socially just – allocation of scarce resources is for governments to get out of the way and allow markets to operate as freely as is practicable. Around the world, however, what we’re seeing is the exact opposite of this: more regulation, more interference, more corporatist stitch-ups like Solyndra and the great wind farm boondoggle. The markets aren’t free so the price mechanism is being distorted and it becomes harder and harder for anyone to work out where true value lies. Which is why that particular fund is so heavily weighted towards gold investment. And why – one reason at least – it has performed so well this last decade.
The brilliant man who runs the fund was at pains to point out that he is not in gold by eager choice but rather as the default option, faute de mieux. In other words, what he’d much rather be doing is investing in well-run businesses and watching them create value, rather than holding a resource whose value has almost nothing to do with intrinsic worth and almost everything to do with the (deliberate and cynical) devaluation of the currencies in which it is priced and the ongoing uncertainties in our utterly debased and corrupted global market.
This cannot continue forever without a messy and ugly reckoning. For me, the only question now is “How messy and ugly?” That and, of course, “When?”
I’m reading The Big Short at the moment – Michael Lewis’s account of the sub prime Ponzi scheme which brought about the current global economic crisis.
What has struck me again and again is that we’re inhabiting exactly the same unreal world now as we did in that crazy – and supposedly lessons-learned-from period – when the credit agencies were granting triple A status to mortgage packages which should have been classed as junk. All that has happened is that, instead, of sub prime, the new Ponzi scheme is the market in government bonds.
If you’ve read The Big Short, you’ll recall that one of the heroes is a man who ran a fund which bet heavily against sub prime mortgages knowing – because it was so obvious and inevitable – that one day they would collapse. He made his clients a killing in the end but that’s not the interesting part. The interesting part is how much stick from he got from his clients before his (one-way) bet came good. They all wanted to be on the other side of the bet because that’s where everyone else was. Most people are like this. They want to belong. They don’t want to be with the outliers or the freaks, regardless of how ultimately right they may be.
As one of life’s outlier/freaks myself, I’ve just about grown used to the stigma which invariably attaches to those who go against the herd. Indeed, I’ve actually started to enjoy it because I find myself in such splendid company. On economics I’m with Douglas Carswell and Dan Hannan and all those wise loons at the Cobden Centre; on climate change, I’m with a fabulous, all-star A team which embraces everyone from the brilliant economist Ross McKitrick to the brilliant theoretical physicist Richard Lindzen.
I don’t want to be right about the way the world economy’s heading, really I don’t. I’d much rather there was a super-dooper economic recovery just around the corner – one which made us all richer and happier and gave us wonderful new jobs which were fun to do and incredibly well-paid with all sorts of amazing health and pension benefits.
But I don’t see any evidence that we’re doing anything that might bring this miracle about. Do you?