In Our Stars?

“The fault lies not in our stars, but in ourselves.”

Photo: NASA. Source: Flikr.

That’s a line from one of Shakespeare’s plays, when a character tells another that it’s their own responsibility for what’s happening in the world. That’s not a bad perspective to have.

It’s easy to blame others. Some say the world economy is unbalanced because China exports too much. But China exports so much because we in the US buy their stuff. And we need the Chinese to finance our deficit and buy Treasury bonds because we don’t have enough savings domestically. Should we blame the world’s second largest economy for the imbalances we have in the largest economy?

In Europe, is their currency in trouble because Greece and Italy can’t balance their books? Or is the issue with the countries with crummy banks, where the loans are politically controlled and they keep kicking cans down the road?

The problems aren’t with the upstarts, but with the leaders. In Europe a statist banking system treats debt like a “gentleman’s agreement” rather than a business proposition. The solution is for Greece and Italy to reschedule their debt and have the other countries adjust. Either that, or sell off the Parthenon and Coliseum. But the other worthies in the EU don’t want to hear about that.

In the US, we have a tax code that penalizes investment and subsidizes consumption. Should we be surprised that we buy too much and save too little? If China’s surplus didn’t exist, we would have to invent it.

Are these problems in our stars or in us? Shakespeare sure got that right.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2019-05-03T05:37:13-04:00May 3rd, 2019|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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