Reckoning today from London, England...
What strange pass have we come to?
The whole world is on the edge of its seat, this morning. Taking short breaths.
People watch. They wait. They listen for a pronunciamiento that could mean trillions in losses...or gains. It could — in theory — push up the world’s growth rate...speeding up economies and bringing millions into the workforce, where they can earn money to pay for their wants and needs.
At the margin, it could make the difference between life and death. Many millions of the world’s people live day to day, hand to mouth, barely getting enough food to eat. A downturn in the world’s economy hits them like a plague in the Dark Ages, pushing them over the edge into famine and death.
And from whom will these precious words come today? They will come from Benjamin Shalom Bernanke, once of Dillon, South Carolina, and lately of the US Federal Reserve Bank in New York.
The headlines tell the story:
“World Awaits Word from Jackson Hole.”
“Investors edgy before Bernanke announcement.”
“World economy rests on Bernanke’s shoulders.”
Who is this man, Ben Bernanke, and what kind of shoulders does he have? Is he a great deep thinker...a renown philosopher in whom the world’s people could have confidence? Is he a captain of industry...a man who has proven that he can lead men and run a profitable business? Is he an investment wizard, like Warren Buffett, with billions of dollars as testament to his understanding of the world of money? Is he even a powerful politician or an acclaimed statesmen, who can at least pretend to solve the world’s problems by threats and force?
He is none of those things. He is a fellow who studied economics and became a university professor. Now he is a quasi-bureaucrat, working as head of a quasi-bureaucracy, whose main function is to make sure bankers make a profit.
“It’s either control or money,” says our friend John Henry. John made a fortune out of a simple insight. If corporations would give up control of their legal problems, they could save themselves a lot of money. John takes on their legal challenges and handles them as commercial matters; he doesn’t particularly care whether they win or lose the case, as long as the net cost is lower. He shares the savings.
“But a lot of companies don’t really care about saving money. They don’t want to give up control. Or, more precisely, their legal team doesn’t want to give up control. So, they end up spending more money.”
Control or money. That is the choice. An economy functions best with no one in control. Central planning doesn’t work. A little bit of it is a drag. A lot is fatal.
. . . . . . . . . .
And poor Mr. Bernanke. The weight of the whole world’s illusions on those weasely shoulders. An honest man would shrug.
The Daily Reckoning | Friday, August 26, 2011