Important note regarding financial advice:
This is an APOLOGY and CORRECTION issued by the global financial industry (formerly known as the Masters of the Universe, the Lords of Capitalism, the Gurus of Free Market Economics and so on).
Our headquarters were in Wall Street, New York, but we had representatives in every major city on the planet.
Our reps wore black suits, had fancy offices in the central business districts, and promoted our philosophies in every newspaper.
Today, we are using this space to issue an unqualified apology to, well, pretty much everyone else on planet Earth. And particularly to folk in emerging markets such as Asia.
First, we’d like to apologize for the "long-term investment fallacy".
We told you in hundreds of books, thousands of speeches and countless financial advice columns that stocks may fall in the short term, but always rose in the long term.
The phrase “long term” was traditionally defined as a generation, which is 25 years. We now realize this was completely wrong. Following this advice, millions of people bought stocks in Japan in the 1980s, when the index hit 38,000 points. They are now about to retire and are wondering why the index, more than a quarter of a century later, hovers at around 7,000 points.
Second, we wrote large numbers of negative reports about organizations in emerging markets. In particular, we never wrote about banks in China without sneeringly adding the words "which are technically insolvent".
We now realize that there are many insolvent banks around the world, and the worst examples are not in Asia. They are in London. And Iceland. And right here in Wall Street.
We goofed. Sorry!
Third, we peddled the wonders of globalization. We and our acolytes, the financial press, worked tirelessly to tell the world that it was a good thing that your bread came from Germany, your butter from New Zealand and your marmalade from Valencia. We now realize this makes no financial sense at all. (Not to mention the fact that it causes climate change which might just destroy the world.)
In recent weeks it has become obvious that the one large country which has escaped the financial tsunami is India, which ignored almost everything we said about globalization.
Oh dear. Yep, we screwed up.
Fourth, we pushed the phrase “trade not aid”. When your organizations were in trouble, we said they should not receive bailout aid, since free market principles required badly managed institutions to go bust. But when our car makers and other institutions started to go belly-up, we realized that sometimes you should give troubled organizations bailout funds.
Ouch. Sorry again!
Fifth, we promoted commoditization of bad investments. We thought that by chopping them into small pieces and selling them to lots of people, risk would be lowered. We now realize that bad investments are bad investments, and the more people involved, the more people lose money.
Yeah. MAJOR goof-up.
To sum up, much of what we told you was wrong. We promise not to do it again.
In the meantime, if you see an unemployed person in a black suit wandering around your nearest central business district, please be kind. Buy him a bowl of rice.
But don’t believe a word he says.