Political Expediency Rules At The Expense Of Sound Economics

Having left Professor Roundabout last week to the tender mercies of Dr Susan Swings, it was no surprise to see a change in his demeanour when I bumped into him on Oakthorpe station.

‘It is alarming. Really very troubling,’ he began. ‘Of course one never knows what to expect these days but still, frankly, I never saw this coming.’

He ran his fingers though his twisted thatch of black hair and continued. I could tell that he had been bottling up his feelings. He had received a shock and now, a few days later, I sensed that he was ready to let it all come spilling out.

‘Go on,’ I said sympathetically. ‘You can tell me…’

He gave me a faintly quizzical look, before resuming.

Life-changing events for Professor Roundabout

‘Yes,’ he admitted. ‘I saw things last week that I never thought I would ever see. Things that have puzzled and shocked me. In equal measure I have been fascinated and repelled. I have heard things that might change my future, alter the whole course of my life. Things that might change the lives of all of us…’

This, I thought was going a bit too far. The Professor’s personal life was, well – nothing more than that. Personal to him and to Dr Swings but hardly central to the future of mankind. Faced with this evidence of a deluded personality, I felt that it was time for a few stern words. Roy has, after all, been a friend of mine for many years and it was sad to see his equanimity shaken to this extent – and by a mere affair of the heart!

‘Roy,’ I began, placing my arm upon his shoulder, ‘Don’t you think you are exaggerating the importance of this? Such a… tumult… is nothing new. It affects us all at one time or another. It is just that you – and I hope you don’t mind hearing this from one who has known you as long as I – are perhaps a little inexperienced in these matters.’

‘Inexperienced! Me!’ shouted the Professor, jumping up from the bench upon which we had been sitting and throwing his long arms into the air. ‘Why, I have been at it all my life. I have devoted myself to such things. There is nothing you can tell me about…’

‘Oh come now, Roy’, I interrupted, ‘you may fancy yourself as a bit of a lounge lizard but you are hardly Casanova!’

Getting the wrong end of the stick

‘What on earth has Casanova got to do with it?’ roared Roundabout, by now attracting the attention of the other train goers. ‘What on earth has that demon lover got to do with the events of last week? I always thought you were a bit peculiar but have you gone completely off your trolley?’

I could say nothing. Could it be possible that I had somehow grasped the wrong end of the stick? If Roy had not been talking about his rendezvous with Dr Swings, then what had he been talking about?

The Professor took a short perambulation up and down the platform and, having calmed himself, he confronted me with a look that mixed bafflement with a faint distaste. ‘Sometimes,’ he said, ‘you seem to be in a different world altogether.’

‘Well that’s fine coming from you,’ I retorted, ‘a university professor!’

‘But look,’ I continued, keen to appease the Professor and curious to find out what he had in fact been talking about, ‘I do wish you would explain what has been troubling you…’

Entering the realms of fantasy

‘The economy, of course!’ he cried. ‘And economic policy! That is what has been troubling me! I am at my wit’s end! Some of the things that have been said and done in the last week…well, we seem – as Captain Mainwaring would have put it – to have entered the realms of fantasy!’

‘Go on,’ I said.

He did. ‘We have Gordon Brown wanting to borrow his way out of a hole that has been caused by too much borrowing in the first place. We have the Governor of the Bank of England claiming credit for reducing the level of inflation – which, as we all know, has been reduced by the recession alone. And we have people lining up to blame George Osborne for threatening to undermine Sterling –when it has already plunged by 25%! Goodness knows what nonsense we will hear next…’

‘Yes,’ I agreed. ‘And I heard one Labour MP – a certain Kerry McCarthy – argue that if the Government’s vast borrowing boosts growth sufficiently, then it may not be necessary to raise tax rates to repay it!’

‘An excellent example of the very thing I mean,’ agreed Roundabout. ‘If such were really the case then the Government should borrow as much as possible all the time! For the last ten years Gordon Brown has been telling us that excessive borrowing is reckless. But now he describes this as an “old orthodoxy”. He seems prepared to borrow massively in order to save the fate of this generation – and his own political skin – while leaving our children to pay the bill. It is immoral.’

‘Political expediency rules at the expense of sound economics,’ I observed.

‘Exactly,’ said Roundabout. ‘But of course the world has given its judgement by dumping Sterling. That is the real verdict on the state into which Brown has delivered our economy, and of his sudden conversion from Prudence to Profligate.’

Borrowing from the future

‘Our economy is in a bad way,’ summed up the Professor, ‘and no amount of politicking can disguise it. Our leaders can talk about “new world orders”, “reform of the international financial architecture” and a “coordinated global response to the credit crunch” but the fact is that for the last decade we have been borrowing from the future to pay for today, and now reality has caught up. Our politicians do us no favours by peddling the illusion that we can have all we want today with no regard for the future.’

And with that, Professor Roundabout’s train pulled into the station. On he hopped and the door slammed behind him, trapping his long purple and white scarf which flapped from the side of the train as it pulled away.

It left me on the platform, thinking. I was no closer to knowing what had passed between Dr Swings and Professor Roundabout on that fateful evening. But I wondered – was the Professor having all that he wanted today with no regard for the future? Was he, indeed, at that very moment heading to London for another assignation with the fair City economist? I, too, was troubled. More this time next week…

Looking beyond the doom and gloom, I see a great opportunity Meantime, have you noticed that pretty much everyone in the media seems to be obsessed with churning out doom and gloom at the moment? I guess it just makes for better headlines. Well, that’s all well and good – and indeed, the markets are not the best right now.

But I’m convinced that the universal weakness we’ve seen has laid the foundations for the best share buying opportunity I have seen in many years. You don’t get many chances like this as a speculator. The market went up for five years. Many stocks were expensive. Now, all shares are down, the good and the bad.

I believe we’re due for a “rebound” – and a big one. Buying the right shares now could hand out huge “bounceback” gains. There are plenty of good small stock ‘punts’ I’ve been looking at. I’m talking about a “forgotten” market full of home-grown firms you can buy right now for pennies on the pound! But there are three that I especially like. These are the shares that will be my top thee “bounceback belters” – and I’ll send you details of them just as soon as my new report is ready.

It’s almost ready. Stay tuned.

Regards,

Tom Bulford
for The Penny Sleuth

P.S. We’re on the brink of recession... banks are falling like nine-pins... the stock market has been plunging...

But if you’re interested in devoting a small portion of your capital to some carefully selected, bargain-priced stocks... it doesn’t get much better than this!

You see, all this bad news and all of these hysterical headlines have driven shares right down from the top floor… through the second floor… through the first floor and the ground floor… and into the BARGAIN BASEMENT. And that’s where I just love to go when I’m picking up shares.

Keep an eye out for my “Top Three “Bounceback Belters” of 2009” report soon.

P.P.S. If you want to follow the insights of a small company investor, and uncover the hidden gems of the stock market, find out more about The Penny Sleuth by clicking here.

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Political Expediency Rules At The Expense Of Sound Economics

Professor Roundabout is Troubled