The Veneer Society

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During the past week I was fortunate enough to have been in the US, firstly fulfilling an engagement to speak at a private investment conference in Houston where we were honoured to have Lew Rockwell give the opening address.

Later, I was told, at the interval after my presentation, that one member of the audience had turned to his neighbour and muttered:

u2018I’m so damned depressed I don’t know if I’ll be able to drive home!’

To the friend who, chuckling, had told me this, my immediate — if cynical — response was to say that we’d obviously done our jobs well…

Clearly, the mood among the 120 or so generally well-heeled guests in attendance was a sombre one, but it was also one noticeably full of puzzlement at why the US economy was not responding, in the manner they had been led to expect, to the usual battery of government and central bank counter measures, despite what they were being told was a u2018mild recession’, or a u2018soft patch’, or a u2018temporary slowdown’ due to u2018geopolitical uncertainty’.

Many readers of this site should know full well why this was the case, but what struck me most was that 2 years of an equity bear market, increasing evidence of the fraying fabric of their financial wealth and an unspoken awareness that something was fundamentally wrong with their world, had brought members of the audience to a pass where they were willing to listen to an alternative — if gloomy — rationale for what it was that was afflicting them.

Slowly, perhaps, the realization is beginning to dawn on people that they are about to be tested in a way they have not since their grandparents were young.

Let’s just hope the short-covering unwind which is driving the S&P higher into war does not lead to this very necessary reassessment being stillborn.

After Houston, a couple of colleagues and I jetted off to the Austrian Scholars’ Conference at the Ludwig von Mises Institute in Auburn, Alabama, where I was asked to help run a panel discussion on financial markets.

This was commendably well attended, given that it was the first early morning session after an opening reception in which the participation was enthusiastically alcoholic, and here it was again apparent that fear was, if not yet dominant over greed, then at least being given equal billing at last.

The questions, too, reflected many of the same concerns as in Houston — were we anywhere near a bottom (probably not), was housing a safe investment (decidedly not!), would there be banking failures, would there be inflation, would the government confiscate gold (quite possibly, almost definitely, if they felt they needed to, being the respective answers).

All the way through this trip, there was something nagging at us, something indefinable about what was going on around us.

Aside from people fretting about their investments, there was a sense of frustration at a government palpably doing more harm than good and there was a softly spoken resentment at the loss of liberty, at the evaporation of prosperity, at the dimming of a dream of progress.

On the way to the airport, we drove down one of those soulless strip malls that so blight suburban America, with its rain forest profusion of billboards and its vast, reflective oceans of car dealerships and it began to nag at us again.

u2018WE FINANCE’… u2018ASK FOR TERMS’… and the unsurpassable u2018BAD CREDIT WELCOME’, screamed the hoardings.

Meanwhile we parked at a friend’s, on the lot next to which was being built — in an affluent, but by no means exceptional, suburb of the city — a $1.3 million dollar house which, to our horrified European eyes, looked like the architect had learned his skills presenting one of those children’s TV programmes where they make everything out of card and 3M tape, for nowhere was there any brick or other evidence of solidity, merely chipboard and plasterboard, clapboard and metal screeds.

This was a house, being built to the best of current specifications, that didn’t look like it would physically outlast its mortgage, much less offer the residue of an asset thereafter on which to retire unless some Greater Fool were to step in shortly and buy it at a still.

Still the word wouldn’t come. Not through a diet of powdered eggs at the hotel, nor amid the continual proximity with cheap nylon uniforms, uniforms worn by the plethora of mildly threatening jobsworths who have suddenly emerged onto the nation’s streets and airports to guard against a nameless terror.

Then, finally, as we were travelling in an elevator lined with what was supposed to be a plush green carpet and walls of rich cherry panelling — neither of which was, in reality, more than a poor facsimile of quality — it suddenly struck us: America had degenerated into the archetypal Veneer Society, a land where the superficial impression is one of great wealth, but which, underneath that thin, misleading outer layer, is made of cheap, short-lived and inferior quality materials — all bought on created credit — the better to give its insistent consumers, but increasingly uncompetitive producers, a phoney feeling of well-being, so they might maintain the necessary belief in the superiority of their ways and so conceal the true depths to which a century of Collectivist thinking has reduced their once-shining Republic of sovereign individuals .

Yes, the more we thought about it and the further we extended the metaphor to consider its corporate, governmental, financial and monetary systems, the more it rang true that America has become the Veneer Society — a triumph of outward style over real substance.

It must have been what fourth century Rome felt like, too, for those unlucky enough to have experienced it.

Sean Corrigan [send him mail] writes from London on the financial markets, and edits the daily Capital Letter and the Website Capital Insight. He is co-manager of the Bermuda-based Edelweiss Fund.

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