Monday, December 07, 2009

Bill Gross And Nouriel Roubini Focused On Yesterday's News

Roubini and Gross are revered with almost cult-like status in the financial community. As is El-Erian, a peer of Gross at Pimco. I have nothing against these people but let's get real. Gross and El-Erian were completely oblivious to the world around them until it had collapsed. El-Erian was and is on another planet in his view of reality. Roubini was spot on in the housing crisis but as we have said countless times over the years, housing is not the problem with the U.S. economy. Roubini served in the Clinton administration and therefore, I can only assume his views of economics are representative of the Clinton economics that created the destruction of the U.S. economy. Maybe he now eschews those policies. If he does, I'd like to see his plan for reviving the economy that includes the repudiation of neoliberal economics the Clinton and Bush administrations embraced.

Now both are focused on yesterday's news. I find it almost hilarious that people are now talking about a bubble building in China. The bubble has been building for at least ten years and it popped two years ago. Just a little late to be considered any type of serious insight. How is worrying about what China is doing right now of any relevance to investors? The money has been lost long ago whether it was financial investment or soon to be physical investment. Looking at the chart of the Shanghai Index below, we can see the bubble collapsed two years ago. What China is doing today is simply trying to keep the scheme going. It will fail and the bubble will continue deflating.

My point with these types of posts is that society needs to realize most hero-worship is misplaced and most people held on a pedestal don't generally have any great insight into policy or economics. The sooner we as a people jettison this belief that we should defer decisions about our lives, our economy and society's money to someone else, the sooner we will get out of this crisis. That most definitely includes politicians as well. The fact that Gross and El-Erian are making tens to hundreds of millions of dollars off of other people's money by supposedly providing superior insight is just laughable.

Link here.

posted by TimingLogic at 11:50 AM