Memories of CLICO: John Mauldin, Michael E. Lewitt and The Death of Capital

Profligate – definitions 1 & 2:

1 : completely given up to dissipation and licentiousness

2 : wildly extravagant

Most of us ordinary folks never seem to have the time, education and family guidance to become interested early enough in global economics or in global anything. It is our nature or nurture to think only locally. We hold an item in our hands in the village retail store but we do not wonder or even know that the same item from the same factory is sold all over the world at widely differing prices. And we never consider that the price can be thought of in money, in time or any number of other methods of quantifying and comparing value.

The cost of a shovel: not as simple as you might think

In New Jersey I can buy a good quality shovel with my pay from one hour of work as a welder. North of Mumbai that same shovel from the same factory is only half the price in US dollars – but it now becomes a week’s worth of work for a welder.

Why is that? How does money work? If I can’t really understand the pricing of a common item like a shovel, how can I understand what just happened in Europe where it looks like the world is arranging another bail-out for irresponsible spendthrifts and crooks – this time the profligate Greeks?

How do all these give-aways and bailouts impact a person of ordinary means living near Grape Hall, Barbados?

What should I do with my modest income, and even more modest savings and investments? How should I plan the next five years to put my family in a stronger position when nobody knows what financial storms are just over the horizon?

These are not calm waters for anyone and many, indeed most, of those talking heads in government and on TV who offer financial advice appear to be the same ones who caused this mess.

An Old Friend…

An old friend recently sent me a piece from John Mauldin’s Outside the Box financial column at Investors Insight.com.

The article is called The Death of Capital and is a mix writings by Mauldin and Author Michael E. Lewitt. I’m not sure that I understand it all or most of it. I don’t know what a “Structured Investment Vehicle” is or why Lewitt is calling for them to be banned but I get about 90% of the article and it boils down to this quote…

“What Adam Smith pointed out more than two hundred years ago is equally true today – our society, fed by the media, worships wealth at the expense of other values that are far more important to a cohesive and healthy society. The entire mission of The Wealth of Nations was to try to recognize man for what he is – a social animal who is reliant on the good opinions of his neighbors – and to develop the optimal economic system to harness that human essence for the good of all mankind. Smith believed that system was a free market, and history has by and large proven him correct. But the United States has strayed from a free market model to a system that privatizes gains and socializes losses.

All I could think of was CLICO & CL Financial

The profits that were taken from the company by Leroy Parris, Dupris and friend Prime Minister David Thompson are theirs.

The losses? Well… those losses are on the backs of you, me and our children and maybe the next couple of generations.

Privatized profits. Socialized losses.

That is what Thompson, Parris and the rest of the CLICO clan are doing to you and to me.

Further reading

BFP April 16, 2010 – CL Financial Shocker: “10 to 15 cents in the dollar available to pay claims”

Ian Bourne’s Bajan Reporter: CLICO Unplugged: An Insider’s Perspective

2 Comments

Filed under Barbados, Consumer Issues, Corruption

2 responses to “Memories of CLICO: John Mauldin, Michael E. Lewitt and The Death of Capital

  1. Donald Duck Esq

    Why is it that our minister of finance has gone so silent these days?

  2. Green Monkey

    Robin Hood like he really didn’t understand economics when he went about Sherwood forest tiefing from the rich to give to the poor. He was supposed to be tiefing from the poor to give to the rich. No wonder King John and the Sheriff was so vex with he.