Jeff Harding

Message From The Land Of Conventional Wisdom 1.0

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Letter from the Milken Global Conference

I’ve been to four panels so far and I feel as if I am watching TV. The bottom line is that I have never heard so much conventional wisdom since I watched CNBC which actually was this morning. Actually some of the speakers had something to say but it was mostly investment and macro data, not anything related to what I would call an understanding of the World Situation.

One thing I noticed was that all of the investor types, mostly hedge fund or investment managers, talked a lot about risk. In fact risk pervaded everything they said. I don’t recall hearing that a few years ago. Don’t get me wrong, I think they are mostly focusing on trees but they say they are mostly aware of “macro” events. The guy who heads the State of Michigan pension fund ($50 billion) says that’s what he thinks about most. In other words they all got creamed and the hurt still stings. They are looking for ways to interpret the world but I didn’t hear anything about what kind of marcroeconomic analysis they are employing. One of my lunch mates at my table is a trustee of a County pension fund and he said they lost $2 billion of $6 billion in the crash. They were 4% into RE MBS and CDO investments. Also they were about 6% into real estate. Yikes, that’s a one-third hit. He said they’ve almost earning it all back.

Why isn’t this a way for Austrian theory economists to cash in on this wish to understand how the economy works? It seems as if you have to have credibility and if you aren’t vetted by the Harvard Economics Department, they won’t take the risk of listening. They’ll play it safe because that’s what many of them do.

Last night in my class I discussed the business cycle and played a video of Peter Schiff’s greatest hits. It was amazing that he predicted the future almost perfectly. On the other hand, his investment decisions were way off on the other side of things. So was it a fluke? I’ts all marketing ideas folks. We should be leading the discussion but we are obviously very poor salesmen.

More later.

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