A Heated Exchange

Newcastle Herald

Saturday October 18, 2008

THATS LIFE BEN QUINN

The late British financial visionary Baron Lionel Charles Robbins

described economics as the science which studies human

behaviour as a relationship between ends and scarce means

which have alternative uses.

Huh?

Clear as mud  thats economics in a nutshell.

As the United States financial crisis sends shockwaves around the

globe, now is a scary time for punters who think of Dow Jones as

a top-of-town department store, liquid assets as beers in the

fridge and recession as the snack that precedes luncheon.

The rampaging bull market has run into an electric

fence, replaced by the worst bear market since the Blue

Oyster Bar in the Police Academy movies.

The bubble has burst like a fart in a cold bath.

In recent weeks we have been overwhelmed

by an avalanche of stories screaming crisis!,

meltdown! and other such soulless Armageddon

rhetoric which proves beyond doubt

that economics is as easy to tie down and de-

fi ne as a camoufl aged midget secret agent

in Beijing during a dust storm.

My pathological fear of economics comes

from modern history classes in high school

 specifically our study of hyperinflation in

Germany after the Allies fi nally tore through

them in World War I.

I got it, sort of, that unregulated printing

of the national currency rendered it almost

worthless, but part of me still cant accept

that in some circumstances a wheelbarrow

full of cabbage is not enough to buy a loaf

of bread. A manbag, maybe, but fair dinkum,

a wheelbarrow?

If you digested the good barons muddled

musing at the top of this column and actually

comprehended what the hell he was on

about, youre either well ahead of the game

or a dirty liar.

When heavyweight experts like that

Greenspan bloke with the atrocious

combover and Jimmy Buffetts brother

Warren cant offer insights that remotely

make sense to even the most hardcore

fi nancial nerds, what hope is there for poor working stiffs who

dont give money a second thought until their wallets are empty

and the ATM wont give them any more for milk and nappies?

The sheer mass of mind-numbing gobbledygook is why most

of us switch off when economics discussions progress beyond

the tragic demise of the barter system and, some years later, the

cruel axing of the handsome $2 note with woolly mammoth John

Macarthur on one side and wheat dork William James Farrer on

the other.

You might nod your head gravely at a dinner party when the

token numbers cruncher starts analysing the dangers of oligopoly,

but thats only because youre worried about missing out on the

car, cannon or battleship in the draw for pieces and ending up

with the despised thimble stuck on a hotel-laden Mayfair.

You might lick your lips over the prospect of easy scores through

legal fi ddling of the books, but the fantasy turns sour when you

realise negative gearing is a complex numbers puzzle and not the

seductive removal of lingerie.

And if you think hedge funds are for hedgehog war veterans,

Fannie Mae and Freddie Mac were the Huxtables neighbours on

The Cosby Show, collateralised debt obligations (CDOs) are what

George Bush was looking for in Iraq and global credit crunch is a

brand of breakfast cereal, you better have a healthy stash buried in

the backyard and know how to get maximum yield from a modest

vegetable garden.

Or maybe, just maybe, while the greedy gutses responsible for

this and every other fi nancial disaster helplessly watch their house

of cards tumbling down, your blissful ignorance about all things

economics will turn out to be your greatest asset.

When Wall Street tanks, causing a domino effect across all the

markets that matter, youll find it much easier to recover when

your stock portfolio contains only chicken, beef and vegetable.

Plenty of smart people have advised each and every one of us to

snooker money away for a rainy day.

But in these perverted times when not even houses, savings and

superannuation are safe, surely theres a compelling argument to

spend every cent while youve got it and enjoy life while the suns

shining.

Thats all well and good while theres still money around,

opined my eternally wise financial adviser Old Mick, who must be

getting close to 80. But youll know it if we have another

depression. Everyone will.

Now theres a cheery thought even us dunces can grasp.

© 2008 Newcastle Herald

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