Volume 3 Issue 30: Intelligent Investing

Pity the Policymakers

I just really like the analogy given by El-Erian here when describing the situation in the Eurozone:

I don’t know about you, but whenever I am in an airplane experiencing turbulence, I draw comfort from the belief that the pilots sitting behind the cockpit’s closed door know what to do. I would feel very differently if, through an open door, I observed pilots who were frustrated at the poor responsiveness of the plane’s controls, arguing about their next step, and getting no help whatsoever from the operator’s manuals.

So it is unsettling that policymakers in many Western economies today resemble the second group of pilots. This perception reflects not only the contradictory pronouncements and behavior of policymakers, but also the extent to which economic outcomes have consistently fallen short of their expectations.

Looks like tough times ahead. But remember this:

Be fearful when others are greedy, and be greedy when others are fearful.