The World Needs A Leader

"I can calculate the motion of heavenly bodies, but not the madness of people." - Sir Isaac Newton

The above quote comes from the South Sea Bubble of 1720 after Sir Isaac had lost a fortune.  For those of you how have not studied the history of market bubbles, the South Sea Bubble was created in the 1700's when a company, the South Sea Company, convinced the United Kingdom government to give them the exclusive rights to all trade across the South Seas.  In return they would shoulder all the government debt of roughly GBP 10 million.  Not only would the merchants be given the rights to trade but the government would tax certain items to make the interest payments of 6 percent per year.  It turned out that the company never performed on its side to the bargain as it never gained rights from the Spanish government to the ports in Chile and Peru.  This did not deter the company from taking on more government debt and raising millions in stock sales by selling the public on the belief that the riches were just around the corner.  Needless to say that after a magnificent run-up the stock collapsed after England declared war on Spain and left in its wake numerous victims.  High ranking government officials who were involved with the company were tried and stripped of their worth.

Recently another large company MF Global the futures and commodities titan let investors down with a $600 million fraud.  Outside of this Chinese stocks have been notoriously weak on the compliance side and have lead the auditors down the path to disaster time and time again.  In Europe the news is terrible in that the Italian government could soon default on its debt which is the third largest debt load on the planet.  This would be disaster for the global financial institutions.

Needless to say, the market rallied in the face of this adversity on the fact that the consumer confidence in the United States was higher than expected.  You have got to like the madness of crowds.  Certainly all bubbles have to have crowds to exist and run ever higher.  In certain extreme situations frenzied crowds can change a government or support a dictator, just look at how Hitler swept to power.

Throughout the world there is a mild wind of resentment that is starting to stir.  Small crowds have gathered around the globe to express their discontent of the current leadership and policies.  People are fed up at the lack of leadership and they want answers.  I am sorry to say that the crowds are not having enough of an effect as the leadership in the United States and around the world has brushed this off with little concern.  The problem is that until the people find a leader that they can believe in there will be little in the way of forward progress.  Negative sentiment needs to be reversed by someone the people can trust and there are very few of them left.

Today is Veterans Day in the United States and I must admit that having served in the South African Defense Force I can truly say that I take my hat off to the poor souls fighting in Afghanistan, particularly when the cause is being debated in congress and there is no hope of winning.  Furthermore to know that huge cuts to the defense budget are coming that will lead to the loss of a job on their return must be terrible for morale.  Despite that they preserver because of a high moral conduct even when they know that the end is in sight.  Our "leaders" of the world would do well to look a battle worn soldier in the eye, gain an insight from that sense of duty and then turn and command their countries out of this malaise no matter what the political loss of capital.