This is a great talk by hedge fund manager Kevin Duffy about Austrian Economics and Investing. It included some great quotes which demonstrate interventionists in big business, government, media and academia being wrong about the economy, corrupting history, vilifying free markets. I transcribed some of them below.
“At the rate things are going, we are all going to end up working for the Japanese.” -Lester Thurow, MIT, economist, 1989
“The United States is rapidly become a colony of Japan.” -Congresswoman Helen Bentley (R-MD), 1990
“The Cold War is over, and Japan won.” -Senator Paul Tsongas (D-MA), 1992
Austrians were able to see the bubble.
As it pertains to the investor: “Entrepreneurial judgement cannot be bought on the market. The entrepreneurial idea that carries on and brings profit is precisely the idea which did not occur to the majority. It is not correct foresight as such that yields profits, but foresight better than that of the rest. The prize goes only to the dissenters, who do not let themselves be misled by the errors accepted by the multitude.” -Ludwig von Mises
Discussing the investing challenge resulting from that fact that Austrian Economics tells you what will happen but not when. (It is in fact impossible to time markets, as Mises discusses in chapter 38 of human action.)
Vilifying free markets:
“This was about the invisible hand having a party, a non-regulated drinking party, with rating agencies handing out the fake IDs!” -Paul McCully, PIMCO, on the financial meltdown
“This laissez faire really has killed us.” -Jim Cramer, interviewing Rep. Barney Frank (D-MA), Jan 21, 2010
“No one likes to put the taxpayer into situations like this . . . Government intervention is not something I came down here wanting to espouse, but it sure is better than the alternative.” -Hentry Paulson, Treasury Secretary, on the government takeover of Fannie Mae and Freddie Mac, Sept 8, 2008
“Depression scholars – including Bernanke – tend to see the Hoover administration’s approach of balancing budgets and tightening belts during the downturn as a tragic mistake.” -Time 2009 Person of the Year article, Dec 28 2009
“Those who contended that during the period of my administration our economic system was one of laissez faire have little knowledge of the extent of government regulation.” -Herbert Hoover
“Nobody saw this coming” -Angelo Mozilo, CEO, Contrywide Financial, July 24 2007
When markets crash, instead of blaming interventionists and inflationists, there begins a witch hunt against private investors who saw it coming, often short sellers.
“It’s very natural for us all to overreact in times of stress, but I’m not a fan of unmitigated shorting. We have nearly $2 trillion in hedge funds that simply don’t have any reporting responsibilities.” -Charles Schwab, BusinessWeek, July 16, 2008
“I’m for markets. But when it felt like it had gotten abusive, when it was free money to short-sellers who were piling on, it felt less like the market and more like it was being manipulated, I corssed over.” -Lloyd Blankfein, CEO, Goldman Sachs, January 2010
Applauding regulation after Enron:
“Conviction on all 49 counts makes this unlikely in the future. This is good: it restores confidence… We were in the biggest bubble in history… I don’t think that’s going to happen for a long time… There were lessons I think that were learned.” -Jeremy Seigel, as appeared on CNBC, May 26, 2006
“Now we have a greater appreciate of the role of watchdogs. Sarbanes-Oxley was a good idea, is a good idea. Leave it alone. We need it to prevent the enrons of the future.” -Anthony M. Sabino, law professor, St. John’s University, Washington Post, May 26, 2006
Business Week Cover: It’s a low, low, low, low-rate world.
Time Cover: The New Sheriffs of Wall Street (Three women, because the problems were caused by too much testosterone, as opposed to intervention, subsidizing irresponsibility, artificially low interest)
Newsweek Cover: America’s Back! The remarkable tale of our economic turnaround (Celebrating the stimulus)
Business Week Cover: Obamanomics is working better than you think. Who Says? Wall Street. (Picture of Obama-look-alike shooting a giant nickle like a basketball)
“One trillion dollars is a big number. This is enough to buy all of Greece’s debt twice, with enough left over to buy all of Portugal’s debt. It was meant to remove any potential for contagion. Problem solved.” -Alan Skrainka, Chief Market Strategist, Edward Jones, Barron’s, May 15 2010
At the end of his talk, Kevin Duffy showed this cartoon. I’m not certain whether he was the creator:
