Readers of these columns know we at Alhambra Partners steer clear of political embroilment. This is a cultural tone set by the firm’s founder and managing partner, and we all agree with and adhere to this policy. After all, we are paid to preserve and grow the wealth of our clients, and must do so regardless of the state of play in the political realm. We take politics as a “given”, much like the current price of the ten-year bond, and conduct our analysis and make our decisions accordingly.
But a confluence of events in the past week were all together so striking, they have collectively convinced us to take up some writing about the policy direction of the Obama Administration to, essentially, explain why none of Mr. Obama’s initiatives have worked, or ever can work. We wish to state at the outset that our criticisms in this vein are with respect to economics only, and are not in any way political. Indeed, we wish Mr. Obama well, and think it a shame the U.S. economy is not now growing at 4% per annum with a concomitant boom in job creation. So why can’t this happen? If China can grow at 10% per year, why can’t the U.S. grow at 3-4%? Next week we will provide the core answer to this question via the topic of the economic importance of capital to growth; here below we must address what happened this past week, extraordinary as it was.
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