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Byron Wien |
Blackstone’s Byron Wien is up with a new blog post, wherein he relays a conversation he had with someone he only refers to as The Smartest Man In Europe.
Wien doesn’t say who The Smartest Man In Europe is, but describes him as basically an incredibly brilliant, wordly, rich businessman.
Many of you remember The Smartest Man from earlier essays; I have been writing about him annually for more than a decade. He has been a friend for thirty years, and during that period he has shown an almost uncanny ability to see major events affecting the financial markets before other observers. Among these were the fall of Japan as an economic power in the 1980s, the economic changes in China and their significance the early 1990s, and the serious consequences of excessive borrowing in the developed world in the last decade.Continued below.
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His DNA endowed him with a certain amount of business acumen. His ancestors operated canteens along the Silk Road, selling food, weather protection and supplies to travelers to India and China. He apprenticed in finance in New York, but returned to Europe to take advantage of opportunities created during the post-war recovery there. Along the way he has acquired the ABC’s of European wealth – an airplane, a Bentley and a house on a Cap in the French Riviera. The depth and breadth of his art collection is impressive, but material things are not what gives him a high. He gets his thrills from identifying a problem, thinking it through and being right in determining how it gets resolved. In his ninth decade, he is an inspiration to me.
So what does TSMIE see now?
Basically that massive amounts of debt will bring the decline of Western Civilization, but that in the meantime, before that happens, policy makers would pull every trick they could in order to stave off a catastrophic event.
He started out by saying he had done some preparation for our visit. “I think the title of your essay should be ‘Dancing around the Fire of Hell.’ For years I’ve been telling you that the accumulation of debt was going to be the ending of the developed world and for years you have been telling me my views are too extreme. The problem is you are an optimist and I am a realist. You go around with a smile on your face thinking that there are serious problems facing us, but that everything will turn out favorably because the policy makers will do what they have to do to avoid disaster, and so far you have been right. The developed economies and their stock markets have plodded along and investors haven’t made or lost much money in spite of the challenges. At a certain point, however, the temporary measures that the policy makers put in place to avoid financial catastrophe prove insufficient and that’s where we are now. I’m not saying that it will happen tomorrow but events are falling into place that will take the smile off your face.
After getting to the point where fiscal stimulus no long works, the world’s central banks will go into overdrive (as is already happening)
“Before we experience widespread defaults the authorities will pull out every trick in the book to prevent catastrophe. That’s because there is a general belief that the European Union was a good idea. In order to compete against the United States and Asia, the European countries had to hang together. It was as much a geopolitical decision as an economic one. There needs to be more cooperation among the European leaders. The first step is to create a coordinated banking system to prevent a run on the banks. Deposit insurance won’t do the job. It’s too much to expect the various governments to agree to a political union at this time, but there could be a banking union to prevent the European banking system from collapsing.
“The next step will be for every central bank in the world to keep printing money. Ultimately this will bring on a higher level of inflation, but I think the world is ready to accept that. World leaders will agree that growth should be their objective and inflation will be the price they will have to pay for it. This may result in some instability among currencies. Before this happens there will have to be more suffering. Spain and Greece will default. There won’t be outright financial disaster because by the time the defaults take place the banks will have sold most of the troubled sovereign debt on their balance sheets to the European Central Bank. France’s deficit will get worse as Hollande implements some of the programs he talked about in his campaign. Human beings and governments have an unlimited imagination and they will use it to delay the day of reckoning. In the longer term the crisis may turn out to be a good thing because the pain of what we are about to go through will prevent it from ever happening again.
He concludes:
“So what am I doing with my money? It is hard to hide in stocks. Even Danone is reporting disappointing earnings; people are so worried they aren’t even buying yogurt. The French auto companies are in trouble. I think gold is going much higher. I am buying energy stocks because I want to own something real. Preserving capital is my focus now, not making money, but I like IBM and Apple. Also some Swiss multi-nationals. If Obama wins in November the market will go down. A Romney victory will create a rally, but once he gets into office he will find there is not much he can do to make things better.”
I left The Smartest Man’s office somewhat dazed. My optimism was clearly diminished by what he had to say, but I still believe that somehow disaster has a way of usually not happening. It seems clear that world leaders are going to do everything possible to avert a financial catastrophe and I think they have the resources to accomplish that goal. It does seem, however, that the developed world has to resign itself to a prolonged period of slow growth.
For what it’s worth, the story doesn’t sound that different from a lot of the Austrian fairy tales about printing and hyperinflation, but still, it’s a well-written read.
(Via @dutch_book
Blue Beings From The Inner Earth
Well, if he happens to be the smartest man in Europe, then you sir are one of the dumbest not to realize he is spot on. The farcical belief that governments will somehow “Fix” the crisis before things spin out of control is absolute lunacy. All these governments, leaders, and central banks have been lying to it’s citizens for at least the past 8 years.
Nothing like shearing the sheeple over and over and over again…
I have said it time after time, Ordo ab Chao.
More like ordo ab infinitas, these super-naturalists that actually believe something can come from nothing are deluded and generally believe themselves to be as God.
Old news. That CNBC video is from over a year ago. 06/15/11
Nothing the genius tells us hasnt been said by ordinary mortals for a decade- in my case- TWO decades ago, 1990 to be exact, complete with the muslim wars etc. zzzzzzzzz
And how exactly does one decides who the “smartest” guy is.
As far as I know, there has being only one undisputed genius (Nicholas Tesla). Everyone else can be disputed.
BTW, IQ test where made by its inventor to make the world believe that he was smarter than everyone else. He didn’t invent anything else, and yet got a better score than those who did something on his era.
There is only one way to prove that a person is a genius. And is by what they create. If they didnt create anything, they are just windbags.
We created an entire system which you are allowed to inhabit, for the time being. We created your money, the corporations you work for, the infrastructure you take for granted, the list goes on and on. Your very being depends on us.
WE are the genius hidden in the background. Tesla worked for us, we controlled what he invented and what was allowed to propagate outside his lab. Need proof? What of his do you see in everyday life that WE didn’t allow you to see, use or own?
THAT is how one proves they are what they claim and the proof surrounds you.
Windbags??? If you want to see windbags, just look in a mirror.
Maybe really smart people are busy having a real good time and loving life instead of working 60 hours a week creating unnecessary junk. Nicholas is the smartest man I have studied. Not sure he was human. He gave Edison and Westinghouse their start. And, when he blew up Tunguska in Siberia with a plasma ball that was really something. We will never know what they stole and locked up the night he died.
If he’s the cleverest man than I’m omniscient. It’s dosen’t take too much of a look to see it’s deliberate. There are as corrupt as it could get. That or the people in charge of global finances are too stupid to tie their own shoe laces. They already have their plan that fills the vacuum. There dictatorship based Agenda 21. Where every aspect of our livs is ruled by them, including how many times you can breath in and out. Ok slight exaggeration, but you get the gist I’m sure.
if he’s so damn smart why is he living in europe?
People of darkness are feeling a strain of “what did I do wrong” syndrome. They did nothing wrong, but people “Of the Light”, and “Spiritually” endowed people are guided by “Prime Creator” to make perfect selections of investment opportunities. Those spiritually endowed people have a huge supply of “Purple Energy” in them. They have a “High Vibration”.
People of Darkness, Low Vibration, and “Red Energy” can do nothing to stop Purple Energy.
On July 15, 2012 Purple Energy will take over 100%. Red Energy will lose control of everything 100%. So when you hear of people losing a fortune, it is probably due to them being controlled by Red Energy.
Smartest Man Alive:
Your name is a funny joke and the only thing you have created are delusions of grandeur.
Read the Bible and the Protocols. Connect the dots
I agree. He sure is the dumbest man in Europe.
You don’t need to be a genius too see all governments are in a downward spiral .We will sway left to right to avoid obstacles in or way on the way down but ultimately we will hit the BOTTOM.
Tea anyone?
Incidentally – all these bailouts shovelled to the banks (yes the insolvent ones, if assets were marked to market),
- by the PRIVATE central banks
- at virtuall zero per cent interest cost
- is invested back in higher yielding bonds (say 5% for arguments sake)
- who foots the juicy 5% banks profit matgin
- the government
- out of……the income from ????
- your taxes
- and you wonder…why….there isn’t enough left in the goverment kitty to pay for services..AND austerity measures need to be implemented,
- plus public sector redundancies
- do the math, and wake up !!
‘mmmm
One of the biggest investors in the world – foots the bill for an atlantic flight, swanky hotel and all expense paid,
- to glean
- prior to the default of soverigns & banks etc, they will try every trick in the book to keep the paper ponzi going, including massive central bank printing, leading to hyper-inflation.
Said employee, leaves dazed,
- having been given the gift of such enlightenment from….the smartest man in Europe
The average Joe Public this side of the pond, who reads zerohedge , could have provided that in 10mins by email….saved him the trip…and Blackrock investors the expense.
This is the problem… For some reason everyone thinks the world will end if we lose the banks, we don’t need them… Remember when they used to be optional to include them in your life(along with government)? I’m pretty sure we were living great lives full family value before the banks came along. Here’s an idea let them fail, in the mean time how about get people prepared to live how we should be living on earth. This is what the media and everyone should be doing, going back to our roots. Cause it’s gonna come down one way or another. They are waiting for the perfect time to flip the switch, which isn’t a good thing for us poor folks. If we had time to explain what is going on to everyone, we could set up a system to be ready when the collapse happens… There is not stopping or helping it. They have ruined our lives, the only power they have is what we give them!!
“For what it’s worth, the story doesn’t sound that different from a lot of the Austrian fairy tales about printing and hyperinflation, but still, it’s a well-written read.”
Please explain why he said Austrian “Fairy Tales” to describe what Austrian Economics says about printing and hyperinflation. There is no FAIRY TALE about it. It has happened multiple times in History. Am I the only person who has looked at history and noticed that every Republic including the Roman Empire and afterwards that has debased its currency has suffered Economic Collapse and has been replaced by Oligarchies.
1. Rome, debased it currency, lead to decline and collapse and subsequently the Dark Ages.
2. 1920′s Republic of Portugal, currency debased by Artur Alves Reis and friends, led to Hyperinflation, Economic Collapse, and Fascist Dictatorship.
3. The Weimar Republic, debased its currency, Hyperinflation, Economic Collapse, led to takeover by Hitler.
4. The United States and the European Union, currently debasing their currencies. If History repeats itself, a Demagogue will emerge amidst the Crisis and Chaos to offer a way out and will seize Dictatorial powers. (Of course if you are “in the know” you realize that we are already controlled by an Oligarchical union of Socialists, Central Bankers, and Corporate Fascists).
Until the Money Changers (Central Banking System) are thrown out on their asses once and for all (like Iceland did), things will never change, and the cycle will repeat itself. On the bright side, Oligarchies are eventually replaced by Republics. The only difference is that now, these Oligarchies have access to incredible technology that allows for an extremely oppressive Police State. Replacing these power grabbing self-appointed Social Engineers/Central Planners/Legalists, would require a massive uprising and the defection of the Police and Military themselves. The only hope for the United States is to follow in the combined footsteps of the Brazilian Revolution (read The Country That Saved Itself) and Iceland (read the news).
Let us Pray that whatever Divine Power that there may be will give The People the Will to spread a Revolution of Thought that will blaze through the minds of all men which will lead to the reconstruction of Societies founded on Morals & Goodness and the wholehearted belief that the judgement and punishment of our intentional commission of Evil Acts will be administered/enforced by a Divine Power. Without a functioning Religious/Spiritual Moral Code, you cannot have a Morally functioning Society, and without a Morally functioning Society, you cannot have a Properly functioning Government. Hence, without a populace that adheres to Moral principles, Society cannot give to us that which we create a Society for, a life of Satisfaction. We must realize and design a Government that can cope with the Human Condition, Corruption and the desire for Power.
When you’re used to plenty and then suddenly have nothing, you have nothing to lose. That is what the central banks fear the most. So they give us just enough to keep us below that threshold.
Then, when things start to fall apart, the government steps in and starts giving us what we don’t want….so we eventually find that “nothing” is preferable to that “something” they have given us.
That’s when communism/marxism has succeeded.