adding insult to injury
- Joshua M Brown
- December 30th, 2012
The debt ceiling debacle last summer "injured" the US government and our citizenry in that it became apparent to the world that we've become an ungovernable nation. The effects of this revelation will be felt for a lifetime or more - history has shown us what happens when the people have decided en masse that a particular empire was in decline, the results have not been pretty.
This week, Congress has decided to add insult to that injury - a public bitchfight over whether or not people making either $500,000 or $600,000 should be the cut-off point for the expiration of a set of decade-old phony tax cuts that were never officially approved anyway. Discussions about taking a nibble off this or that social program, military budget boondoggle or what have you are a distraction and do not warrant the breathless "breaking news" tweet-tornadoes and on-air exaltation they've been getting.
This evening on every news channel and radio station in the country, you'll be treated to the opinions of the following guests:
- Day traders
- "News personalities"
- Make-believe hedge fund managers
- Chief Strategists of firms that only exist on LLC paperwork
- Lobbyists who are part of the problem to begin with
- People who had some free time and a clean suit
- People whose publicity agents and PR firms are on their game
- Former politicians who have no special insight into the current negotiations
- Partisan hacks who regurgitate party talking points for a living
There will be some voices of reason and clarity - more than likely these will be the reporters and bloggers who actually cover this stuff objectively for a living - but these will be few and far between.
My advice is to ignore most of what you hear unless this is entertainment for you. In that case, enjoy it like the Orson Welles 'War of the Worlds' radio broadcast that it is.
Warren Buffett gave an interview to the BBC on Friday. When asked about the Fiscal Cliff deadline, he told the audience it was a non-event either way. Mr. Buffett has as much at stake - in both invested capital as well as the livelihoods of his employees and their dependents - as anyone else in the nation. If he tells you it won't matter, that ought to be good enough. There is no reason you should be actively seeking out the "insights" of others.
* No one knows what will happen, including those in the center of it.
* No one knows what the market or economic reaction will be either, although some guesses will prove to have been better than others
* When all is said and done, off the cliff or on it, you will still get out of bed next year, make the kids breakfast and put them on the school bus. Having some kind of advanced edge on the Fiscal Cliff's outcome will not change that.
Sleep tight, and may the insulting proceedings in Washington carry on without your rapt attention.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.