August 11, 2011
Legendary investor Jeremy Grantham (co-founder and chief investment strategist of Grantham Mayo Van Otterloo – one of the largest fund managers in the world, having more than US $107 billion in assets under management as of December 2010) writes:
So now (July 30), the U.S. – with a dysfunctional Congress – has to decide between two of the ugliest choices seen in a long time. Should they cut government expenditures and therefore cut aggregate demand at a time of a critically weak economy on the cusp, perhaps, of a double dip? Or should they do nothing and allow a technical default, compromising the integrity of the dollar and sending a powerful signal to the world that the U.S., at least for now, is not a serious country and is probably past its prime. Ouch! Nobly trying to resolve this impasse, a small chunk of Republicans has seized the mantle of blackmailers and turned out to be very good at it. Certainly too good for President No-Show. Come to think of it, the choice was between technical default and looking like a Banana Republic and technical blackmail and looking like a Banana Republic! Just different bananas perhaps?
He’s right … the U.S. has become a banana republic with no bananas.
Previous Grantham quotes: