Easy to Lose, Hard to Regain
I remember Black Monday October 19, 1987 The Dow Jones lost (-508, 22.6%). By today’s standards it doesn’t seem like much but remember the DOW is an average and the average fell 23% not 3% or 5%. Importantly, it took almost two years to fully recover from this dark day. I remember thinking that my career in financial service was over before it had begun. I was a bond guy and did not fully comprehend the idea of a 23% drop in the value of the most important companies in the US. But it was the length of time it took to recover. Like the Crash of ’29, these things take time. Fixing the problem takes longer than creating the problem.
One my first day in New York the two senior partners came to speak to this new class of employees at the prestigious investment bank – Goldman Sachs. They did not talk about making money, or markets, or the business. They talk about integrity and reputation. They stressed the importance of maintaining the value of both. The risk is that once lost or questioned it would take years to recover if they were to recover at all.
I am concerned about the economics of the whimsical policies of this administration. What concerns me the most is our reputation amongst the other nations of the world. It doesn’t seem too long ago that the US was viewed as a global “honest broker”
Camp David Accords (1978) President Carter played that role between Egypt and Israel
Throughout the Cold War in the 1970s- 1980s the US tried to position itself as a stabilizing force
Dayton Accords (1995) That ended the Bosnian War
That label has faded over the decades as US foreign policy reflects self-interest over global interests of our friends and allies.
Jimmy Carter, Bill Clinton and Condoleezza Rice have been referred to and they have referred to the US as “the honest broker”
With this administration and its leader no one is referring to the US as the world’s “honest broker”. It will be many years or decades before it can regain the reputation of keeping its word or as the “honest broker”. Like Russia, North Korea and others of it’s like, we will keep or agreements when it fits us to do so.
A reputation is a fragile thing --- easily lost and even more difficult to regain.