Rational Advisor

From Bud Labitan Author of “The Four Filters Invention of Warren Buffett and Charlie Munger. Two Friends Transformed Behavioral Finance.”

Peter Cohan of Babson College recently wrote that

“The problem we face now is fear of insolvency which leads to capital hoarding. Financial Institutions do not know whether it is safe to do business with other FIs because the others might be insolvent.” He believes that “if they could be confident that they were solvent, then they would lend to each other because they would be missing out on profit opportunities.”

However, there is more going on now that remind me of a young patient with cancer. Warren Buffett has described the recent American economy like an athlete who has collapsed of cardiac arrest and needs resuscitating with a defibrillator. But, what if the cause of this collapse is a tumor close to the economic heart?

Tumors that originate in the heart are rare, but can be either benign or malignant.

Because the heart is such an essential organ, even benign tumors can be life-threatening. Myxoma, the most common benign tumor inside the cavities of the heart, accounts for about half of the tumors that originate in the heart. Fibromas, which also develop in the myocardium or the endocardium.

Malignant tumors that originated elsewhere in the body and spread to the heart are more common than ones that originate in the heart.

Malignant tumors, including carcinomas, sarcomas, leukemias and eticuloendotheliar tumors, can spread to any heart tissue. Lung and breast cancers often invade the heart.

Treatment of myxoma is usually done by surgical removal of the tumor.

Treatment of malignant cardiac tumors usually involves radiation, chemotherapy and management of complications.

So, the bottom line is this: If these “toxic derivatives of unknown value” are the tumor around the heart of advanced economies, then they need to be effectively identified, shrunk, and safely surgically excised from the healthy portion of these economies. Until a comprehensive treatment plan is devised to include radiation, surgery, and rehabilitation, the current infusion of extra blood is just keeping this patient alive.

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