More on the full circle of the business and investment cycle

Basic rule to manage life by: no one gets it all their way all of the time. Especially true in business and financial matters.

The commodity exporters that benefited the most from the global credit boom: Australia, Brazil, Canada, Russia, will now feel the downside of that boom more than most. Credit brings forward future demand and spends it in the present, leaving less demand for the future: hence the saying, “comes full circle”. Wise managers save a large portion of the excess capital generated in the boom in order to supplement the slower growth phase that comes thereafter. Unfortunately, most people–and certainly most governments and financial sales folks–are not wise. The preferred strategy is to pretend that the gains from boom can all be banked without any give back period…and that record earnings can only get better. Those who are the least wise and the most risk-exposed the past couple of years, have been looking the brightest. This too shall come full circle.

Here is a direct video link.

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