Seek and Ye Shall Find
A man who wants to lead the orchestra must turn his back on the crowd.”
– Max Lucado.
So. Farewell then Jim Slater, who died earlier this month. We met Mr. Slater only once, at an investment conference at the height of the financial crisis in 2008. Just before going on stage we asked him what he was doing with his own money. He replied,
“I own index-linked Gilts in bearer form and I am holding them in a fire-proof safety deposit box.”
We doubt if he was joking.
Seven years on from the collapse of Lehman Brothers, everything has changed, and yet nothing has changed. There is no longer a perception of panic. $14 trillion of central bank stimulus has seen to that. But at the same time, a predicament brought to crisis by too much borrowed money has been exacerbated by much more borrowed money: $57 trillion of it, according to the McKinsey Global Institute. Perhaps the most prescient commentator before the fall of Lehman Brothers was Tim Lee of pi Economics, who wrote the following back in November 2007, fully 10 months before the failure of a second-rate investment bank triggered a global credit crisis:
“There is little doubt, to my mind, that we are now at a defining moment in financial history, a time that, once it has passed will be referred by economic and market historians in much the same way as the Wall Street Crash of 1929 or the credit and banking crisis of 1973-4 are now.
“Unfortunately, as is becoming increasingly clear, this crisis is not really just about subprime mortgages. It is much more serious than that. It is the beginning of an inevitable realignment of credit and wealth with incomes and accumulated savings… subprime is merely the first part of the credit edifice to give way, rather than the whole story…”
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