(Sounds Chinese to you?) if you have not yet gotten your fix of Wall St.
bashing epithets try googling it.
Are you back? Ok, now that you know that IBGYBG stands for "I'll be gone
you'll be gone" and that probably best captures that subspecies of greed
that spurred much of the risk-taking during the inflation of the credit
bubble, you also understand the animosity it arouses. The anxious memory of
the bubble's burst is still vivid and the pain of its consequences is
haunting us, yet this pain is not sharp enough to push our political system
to enact effective regulatory reforms of the US financial industry.
Many blame the morass on the partisan stalemate that has seized Washington.
Meanwhile, money managers look Eastward for a "solution" (at least as far as
your portfolio is concerned). China, thanks to its authoritarian brand of
capitalism has none of the US legislative and executive snags.
In a recent piece in the "Financial Times,"
(http://www.ft.com/cms/s/0/9cc4c144-1f52-11df-9584-00144feab49a.html), Geoff
Dyer juxtaposes the enthusiasm that this viewpoint sparks to the whistle
blowing of another bubble. Anthony Bolton epitomizes the first camp with his
faith in "the effectiveness of the centrally run economy."
A centrally run economy was at the core of the Soviet Union. Fifty years
ago, in his irascible and Donbas-uncouth voice, Khrushchev famously boasted:
"догоним, обгоним, и вперед пойдем !" ("we will catch up with you [America],
pass you, and go forth" --- hear him at
http://download.sovmusic.ru/m/khrushev.mp3).
In the ensuing years, as the texture of American society frayed in the
turbulent Sixties and the economy followed suit with the Seventies'
doldrums, many in the West started questioning the viability of the
democratic capitalistic system that afforded the questioning in the first
place.
The fact that these days you hardly hear "Soviet Union" and USSR is even
more abstruse than IBGYBG to most tells you that that questioning was a bit
too premature.
Maybe, just maybe the same could apply to the optimism and praise of the
Chinese Way?
No doubt the economic progress realized in China in the last twenty years
has been formidable. But in many ways so it was the Soviet Union "progress"
in the Sixties and Seventies. The main question is how long in the future
can we extrapolate this trend in the future? Will China really catch up with
America as most pundits say in 20 years or so? Can you assume its GDP growth
rate stay constant as far as the eye can see?
Obviously, the very fact that I am posing these questions implies doubts on
my part. On the other hand, in one respect China has already caught up with
the US. The article quoted above features prof. Yu Yongding maintaining that
"the system encourages local governments to invest in trophy projects" and
the lack of accountability of the apparatchiks who make these decision for
"if the project is barely used in five years' time as they will by then have
moved to a different job."
It appears that IBGYBG, or at least IBG is already an achievement in China.
I am not sure how proud of that is the Chinese government, or how much of a
selling point this is to Mr. Bolton.
