• Christian Armbruester

Lycra-Man


Why we must wear lycra when buying government bonds.


I have written a lot of negative things about bonds recently. Going even so far as to compare the current offering in fixed yields to that of The Last Mushroom. Where do you go from there? There was once a time when I rode my bicycle in plain trousers and it did no harm, just like buying Treasuries for every investment portfolio used to work like a charm. Now though, the best we can do is swipe on a pair of elastic, tight and preferably black shorts made of an unforgiving rubber like garment, so as to acquire magical powers which means we just don’t care.


You see, lycra-man can drive anywhere, in the middle of the road or on pedestrian walkways, even if there is a dedicated cycling lane. He also need not care what you think when he blocks traffic for miles on end, by driving in pairs, chatting to his friends. Lycra-man does not need to signal when he turns or stop at red traffic lights, and can proceed however he deems fit. It is the others that must follow the rules, lest they should ever forget. For such occasions, lycra-man has a camera on his head which will only ever record the offences of others. And if anyone ever doth have the infamy to complain, lycra-man reminds them swiftly of his moral high ground, for he does not pollute the planet and blessed therefore, he should be.


The thing is, investing in anything that does not offer any returns is bad enough. There is also the risk of inflation, but government bonds may indeed have a role to play in protecting our downside in times when equities or everything else goes risk-off. The far bigger problem though is the sheer amount of newly issued debt which has been created, and that far exceeds anything one generation can ever be expected to pay back in full. It took Great Britain until 2006 to pay back the last of its loans from the US to finance the second world war.


So here we are, and the only choice we have is to ignore everything we have ever learned, not worry about the things we cannot change and let other people decide what the world may look like in years to come. It is a life full of bliss, at the peak of the pole, the top of the food chain and beyond reproach from the mere mortals who must do as they are told. So, if you would also like to join the few, the proud, and be like lycra-man, beware for there are many barriers to entry. You must be holier than thou, devoid of any regard for others, with highly repressed anger issues, and above all, you need a very good sense of humour. Merry Christmas everyone and see you in the new year.

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