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Jeremy Grantham Pens a Sense on Cents Classic

Posted by Larry Doyle on February 26, 2012 4:00 PM |

Every now and then I come across a piece of research that resonates so strongly with my beliefs and also outlines my hopes and desires for launching Sense on Cents. I thank the regular reader who shared just such a piece with me earlier this week.

I exhort you to save this commentary so you can savor the wisdom provided by one of the greatest financial minds in the world today. Of whom do I speak? Jeremy Grantham.

I provide some appetizers from Grantham’s work to excite you to read and share his entire work to which I link at the end. It does not get better than this!!

Jeremy Grantham provides investment advice, his take on the shortcomings of capitalism, and his investing observations for 2012 in this three-part “Longest Quarterly Letter Ever:” 

>>It gets worse, for what capitalism has always had is money with which to try to buy influence. Today’s version of U.S. capitalism has died and gone to heaven on this issue. A company is now free to spend money to influence political outcomes and need tell no one, least of all its own shareholders, the technical owners. So, rich industries can exert so much political influence that they now have a dangerous degree of influence over Congress. And the issues they most influence are precisely the ones that matter most, the ones that are most important to society’s long-term well-being, indeed its very existence. Thus, taking huge benefits from Nature and damaging it in return is completely free and all attempts at government control are fought with costly lobbying and advertising.

>>And one of the first victims in this campaign has been the truth.

>>To move from the problem of long time horizons to the short-term common good, it is quickly apparent that capitalism in general has no sense of ethics or conscience.

>>As described above, the current U.S. capitalist system appears to contain some potentially fatal flaws. Therefore, we should ask what it would take for our system to evolve in time to save our bacon. Clearly, a better balance with regulations would be a help. This requires reasonably enlightened regulations, which are unlikely to be produced until big money’s influence in Congress, and particularly in elections, decreases. This would necessitate legal changes all the way up to the Supreme Court. It’s a long haul, but a handful of other democratic countries in northern Europe have been successful, and with the stakes so high we have little alternative but to change our ways.

>>Yet the relatively uncontrolled variety of capitalism that exists in the U.S. today may negate many of our advantages. Solutions to these issues – far more important than any others – need a delicate mix of capitalism and wise, democratically-controlled government regulation. That might sound like an oxymoron to far too many people. If we can’t make it sound, plausible, and acceptable in the next few decades, then we are in deep trouble for the world really, really needs U.S. leadership on these critical issues.

I STRONGLY recommend you read Grantham’s work in its entirety and then share it with your friends and colleagues. Grantham not only addresses the very nature of risk, the global markets, and our economy but also the greatest threat to the very survival of capitalism as well.

I welcome linking to Jeremy Grantham’s Q4 ‘Longest Quarterly Letter Ever’ and to his firm Grantham Mayo’s website. Make sure you put both links in your Save Box!!

Grantham is a true American gem and a Sense on Cents Hall of Famer of the highest order!! On a going forward basis you can find his work amidst the Sense on Cents Economic All-Stars in the left hand sidebar of the blog.

Thank you again to the reader who shared his work.

Navigate accordingly!

Larry Doyle

Isn’t it time to subscribe to all my work via e-mailRSS feed, on Twitter or Facebook?

Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

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