Thoughts from the Frontline

“Baby boomers who are counting on the stock market are in trouble.” – Robert Kiyosaki “Pension and health care costs for our employees are going to bankrupt this city.” – Michael Bloomberg

“No one will lend at a negative interest rate; potential creditors will simply choose to hold cash, which pays zero nominal interest.” – Ben Bernanke, 2009 “I think negative rates are something the Fed will and probably should consider if the situation arises.” – Ben Bernanke, December 2015 “In theory there is no difference between theory and practice. In practice there is.” – Yogi Berra

“We aren’t addicted to oil, but our cars are.” – James Woolsey “The greatest asset, even in this country, is not oil and gas. It’s integrity.” – George Foreman

A Special Edition of Thoughts from the Frontline Longtime readers know that I rarely delve into partisan politics. That’s not the usual focus of this letter. While I am sure that most readers suspect that I generally lean Republican, I try not to let that enter into our macroeconomic and investment discussions. And I’m not really going to change that policy today. What I do want to talk about are the rather arcane topics of how the delegates to a national convention are chosen and what a “brokered convention” would actually look like. I think if you understand what is potentially brewing, you will find the ups and downs of the primary process much more interesting.

“When it becomes serious, you have to lie.” “I'm ready to be insulted as being insufficiently democratic, but I want to be serious... I am for secret, dark debates.” “Of course there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?” “If it's a Yes, we will say ‘on we go,’ and if it’s a No we will say ‘we continue.’” “We all know what to do, we just don't know how to get re-elected after we’ve done it.” – All quotes from Jean-Claude Juncker, prime minister of Luxembourg and president of the European Commission

“It does not matter how slowly you go as long as you do not stop.” – Confucius “Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent’s fate.” – Sun Tzu

“The expected rarely occurs and never in the expected manner.” – Vernon A. Walters “The fundamental nature of exploration is that we don't know what’s there. We can guess and hope and aim to find out certain things, but we have to expect surprises.” – Charles H. Townes

“The most reliable way to forecast the future is to try to understand the present.” – John Naisbitt “We really can’t forecast all that well, and yet we pretend that we can, but we really can’t.” – Alan Greenspan

“The Fed’s emergency policies since 2008 have in one sense been a huge success, though we will never know the counter-factual. A great depression was averted. Output is 10pc above its previous peak. Employment is up by 4.7m. “Yet zero rates and QE set off torrid credit bubbles in the emerging world, pushing up the global debt ratio by 30pc of GDP beyond their previous record in 2008. The Bank for International Settlements calls this a “Pareto sub-optimal” for the world as a whole. The chickens have not yet come home to roost.” – Ambrose Evans-Pritchard, The Telegraph

Today I can finally announce an exciting event for Mauldin Economics and for me personally. I believe you will be excited, too. Longtime readers know that George Friedman, one of the world’s foremost geopolitical analysts, and I are very close friends. We have been collaborating for years.

Every week when I write letters to you, I face the question of what to write about and where to start. I actually had a story finished for you early Friday (and it was unusual for me to be done so early).

“Nobody in Europe will be abandoned. Nobody in Europe will be excluded. Europe only succeeds if we work together.” – Angela Merkel, December 15, 2010 “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough.” – Mario Draghi, July 25, 2012 “We have to safeguard the spirit behind Schengen,” Mr Juncker told the European Parliament on Wednesday. “Yes, the Schengen system is partly comatose. But . . . a single currency does not exist if Schengen fails. It is one of the pillars of the construction of Europe.” – London Telegraph, November 25, 2015