What's Going on Here?

I was mildly surprised last Thursday to read an article in none other than the Financial Times (FT) by a Mr Joseph Dear, Chief Investment Officer of the California Public Employees Retirement System (Calpers). I was not surprised that Mr Dear had written, but rather how well he had written and what it was that he had to say.

Unfairly when I think of Calpers I can't help but bunch them together with the clowns at Orange County whose bawdy incompetence in investments led them to make completely unsuitable purchases of structured products which then blew up and bankrupted the county.

So when I saw Mr Dear's article I steeled myself for a Republican attack on financial reform. What followed however was a very well written commentary on the continuing farce of financial reform in the United States.

He launched into a beratement of our legislators and the captains of finance who in his opinion are on the verge of "forgetting that it was our belief in market efficiency and our reliance on self-regulation to contain irrational behaviour and systemic risk" that got us into this mess in the first place.

He went on to defend Frank-Dodd and to highlight the role of corporate governance, increased risk intelligence and the build up of sufficient liquidity reserves as the pillars of institutional investing.

It was a pleasure to see someone in the public sector defend the rights of the public and challenge the holders of public office to fulfil their oaths of public service as opposed to being the lapdogs of powerful interest groups.

My mild surprise turned into near disbelief when this morning the US Economics editor of the same austere FT a Mr Robin Harding challenged the US policy makers to break the "taboo" of discussing government stimulus, to stop grandstanding and to recognise that the US economy is perilously close to a double-dip recession.

To be fair he does not suggest that the only path to economic recovery is to be found through and economic stimulus program, but he does weigh in heavily to the need to look at all options to help reinvigorate the economy and deal with the deficit.

Interestingly he doesn't care to suggest that part of any stimulus could-or in my opinion should include a tax hike on the super rich. But credit given where credit is due-speaking about taboos is the only way to break them.