Thursday, June 14, 2007

Playing With Fire

All but the biggest of liars will tell you that there are things that they have done of which they are not proud. In my case, I recall aged 10 or so deciding, against my better judgment, to go with my equally-young pyromaniac neighbors to make a "potato & weenie" roast in the middle of dry farmland chockfull of dry brush on particularly hot and blustery day. I know the wisdom is dubious with the benefit of hindsight, but so it came to pass. Chalk it up to oxygen deprivation at birth, excessive television and lax parental supervision.

Off we went, cutting a path through the dry brush to the middle of the 100-acre field behind my home, camped ourselves down, and set about gathering straw and kindling for a fire. Once accomplished, we lit the fire, stoked it, and dropped-in the foil-encrusted potatoes to cook. As happens with 10-year olds, our attentions wandered, and so did our vigilance. The wind picked up and next thing you know we are stamping around trying to put out an increasingly large and out-of-control brush fire. Conjuring every ounce of wisdom between us, we set about to cut our losses (still a useful habit today!), and we ran outta there like Sebastian Coe, back to the safety of our garage to hide from potential consequences, laughing nervously about our antics, but still-shaking from fear. The firemen finally arrived, and put out the fire, but not after it scorched 50 or so of the 100-acre field. They never did find us, and we never did 'fess up.

Now, in my investment life, I look at the BoJ and SnB (& PBoC), the respective monetary and interest-rate policies that are being run, and I cannot help but see parallels. Selfishness. Stupidity. Stubborness. Short-sightedness. Lack of Responsibility. The dangers of Playing with Fire. I do not think what I did was funny, and I certainly take no pride in the results. And I think the BoJ, SnB and PBoC (and the more sober-minded amongst their trading partners) should also more closely examine the wisdom of their policies, and their underlying motives, before it's too late, and that which we cherish and upon which we rely is scorched beyond immediate repair. Raise rates now, more boldly, before that absurd Damien Hirst is selling for $100mm. Laughing in his beard, indeed!


Macro Man said...

At least Japan and China are pretty upfront that they have no intention od doing anythign to upset the apple cart, and Japan flat out says we don't care that the yen is betting beaten like a rented mule.

The Swiss, meanwhile, cry more than a hungry baby with colic (Roth was moaning on the tape this afternoon), yet still won't show me the money. And I find that a lot more annoying than anything Japan does....

"Cassandra" said...

What the world might benefit from, borrowing your Harry Potter analogy, is a supra-national policy "sorting-hat". Imagine that lovely Leslie Phillips voice ... "Brazil.... hmmm... yes.... ohhh...Tight Fiscal & Loose Monetary!!...(cheers and applause from the other ministers) .. America...yeesss ... ooooh ...difficult one .... hmmm VERY TIGHT fiscal - Loose monetary (and boy...make sure a BIG CARBON TAX is part of it too...and while you're at it lose your big red-cheeked friend with the glasses... you know, the one with the lousy aim)