"The most significant threat to our national security is our debt," Admiral Michael Mullen, Chairman, Joint Chiefs of Staff, August 27, 2010


Monday, April 23, 2012

The Greater Fool Theory - Updated


"....there can be little doubt that exceptional low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices, his prepared testimony went.  "Although a 'bubble' in home prices for the nation as a whole does not appear likely..."

So speaketh the maestro in June 2005.  Even with his crafty wording, the man could not have been more wrong and we illustrate the severity of his error with this recent photo:


The maestro is, of course, Ben Bernanke's predecessor, Alan Greenspan - the one man designated by TheFundamentals as doing more damage in less time to the United States of America than any other human being.  That is, of course, until Alan's boss, Bush II, was replaced by Obama and the maestro himself, was replaced by the current fed chariman, Ben Bernanke.  New fools striving to outdo their predecessors.

We, at TheFundamentals, are unable to describe, much less explain, the human hurbris that overwhelms mere mortals to engage in acts of desperation so great as to displace the fools who previously attained infamous status for their horrible behavior.  And so, Bush and Greenspan, having attainded high fool status now find themselves graciously replaced by bigger fools -- Obama and Bernanke.  Such is life.  This is Ted Kennedy getting bailed out by Bill Clinton getting bailed out by Newt Gingrich getting bailed out by John  Edwards.  There is always a bigger fool waiting to seize his moment in the spotlight and fail spectacularly.  The weakness of men.

Closing comments.  We know that we have taken literary license with the definition of the greater fool theory which is applied to commercial transactions, usually investment situations, to describe the often proven concept that no matter how much one fool pays for something there is always a greater fool to come along and pay even more.   Fortunately those fools tend to only deal with smaller denominations than the fools about whom we write today.  For those who truly like to distill to the basics, all of our essays revolve around the predictable and constantly repeatable acts of human beings described by these terms -- greed, pride, sloth, gluttony, lust, envy and wrath.  To which we would add an eighth that could not have been known in the good old days -- the ability to distract and deceive entire populations, by the millions, through the simple act of twisting some facts and ignoring many others.  We have chosen to describe this latter act by a simple description of its major perpetrators -- Hollywood media.  

The greater fool theory is alive and well in the 21st century.  Only discipline and constant awareness and focus on fundamentals can offset the foolish behavior of men embracing their ever present tendencies toward lust, envy, pride, greed, sloth, wrath, gluttony and mass deception.  Seven years ago, Greenspan, from his very lofty perch, mislead millions and said not to worry about rising housing prices -- no big deal.  Today, Bernanke, from his lofty perch, says not to worry about rising food, gasoline, transportation, medical, government and all the other price increases -- not to worry, there is no inflation.  Who comes next and what message will they send to the Hollywood media to convey as they destroy America while lining their pockets?

 

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