Evergreen Gavekal put out a story, ‘Could the Congress create consecutive crises?, on October 21, 2016. You can see it here. I just sent the following email to their Chief Investment Officer:
I discovered Evergreen Gavekal about a year ago and I like its courage to stand out from consensus. Plus, there is a philosophical consistency to its stories and themes. That is always good.This email has reference to the piece dated Oct. 21, 2016 and titled, ‘Could Congress Create Consecutive Crises?’ I read it and I must confess that I was disappointed.You were more concerned about the resignation of Mr. Jon Stumpf and about the number of pages of regulation on financial sector – a six-fold increase, than about the mistakes and excesses committed by the bank. You were silent on them. That is disappointing.Just as many mainstream commentators are attacking Trump for his seemingly populist policy proposals, you are attacking the reaction/manifestation rather than the cause. The underlying cause too has to be fixed – preferably, through self-regulation and self-restraint – so that over-reactions are avoided. Then, there is also a moral right to criticise the over-reaction.I had recently finished reading the story of Deutsche Bank in ‘Der Spiegel’. Reportedly, the then CEO Anshu Jain authorised a proprietary trade thrice that went against the product that the bank had sold its clients. In end-2007.It is hard to criticise the regulatory action that has followed and will follow, without criticising the act that drew such a reaction. Call it ‘Karma’. Excessive punishments are not appropriate but before criticising it, the act has to be condemned too, unequivocally.Yes, America and the world run the risk today of moving back to excessive State control but the capitalists have only themselves to blame for it. If they have to stop it, they have to volunteer a ‘mea culpa’ admission and take credible action to show that their apology is sincere, that wrong behaviour would be jettisoned and socially desirable behaviour sustained.Otherwise, the pendulum will keep swinging from excessive State intervention to excessive Market permissiveness. Both are undesirable.