Volume IV, Issue 8 / August 2010
Welcome Letter
Many years and many kilos ago I was a 20-year-old cadet at West Point. The summer between my second and third year I went to Airborne School. Airborne school should be called Parachute School but that would be far too self-explanatory. Airborne school, at Fort Benning Georgia, is where the Army teaches young men and women how to fall out of airplanes in an orderly manner. The school spends very little time explaining anything about parachuting because basic static line jumping requires very little of the jumper. The chute deploys automatically and you land mostly where the winds take you. In fact the majority of the three-week course is spent learning how to enter and exit the aircraft the Army way and how to land. I remember very little about Airborne school other than early morning runs and hours spent jumping off a six foot platform into a sawdust pit in the hot July sun. After three weeks ¨training¨ I fell out of the aircraft five times thereby proving that gravity works. It wasn’t a test of skill but rather courage. I can still remember my first jump. I didn´t sleep the night before. When the door opened and we all stood up, my heart was in my throat the entire time. And when the Jumpmaster pointed at me and commanded, ¨Stand in the door!¨, my first thought was that my mother would still love me if I sat back down. The rest was a blur. Airborne school was a rite of passage. Like every other newly minted paratrooper, I adopted the vernacular and swagger. Invariably whenever a group of us were ready to go somewhere; to a bar, to the library or to the gym, someone would yell out, ¨Stand in the Door!¨. Normal well-adjusted college kids would say, ¨Ok ready guys. Let´s go.¨ Not us. We were paratroopers. Man we thought we were so cool.
A couple of years later, as a young lieutenant, I went to ¨Jumpmaster School ¨ and started to understand a bit more about parachuting, selecting drop zones and rigging equipment. Mostly I spent my time learning how to check if a soldier had put on his parachute and other equipment correctly and to spot any potential safety hazards. By this time I had about 50 jumps and the outright fear of the first jump had been replaced by more of a stress-induced focus. The most important part of jumpmaster school was passing a test on the Jumpmaster Personnel Inspection or as it was called JMPI. It was a bit disturbing to think that my ability to catch a potentially fatal flaw could mean the difference between life and death for some mother’s son. After all I was not yet 25 years old. It seemed an awesome responsibility, which I took very seriously. With graduation from Jumpmaster School came even greater vernacular and swagger and the ability to point at someone else and scream, ¨Stand in the Door!¨
A few years later, I attended Military Freefall School also known as HALO (High Altitude Low Opening) school. This created an entire new level of complexity. Unlike static line parachuting, this required me to plan and think because I actually had control of the parachute and my actions or failure to act controlled my immediate destiny. Here is a video from my era which seems so low tech by today´s standards.
By the time I arrived in Yuma Arizona for the course I had over a hundred jumps and I had been the primary Jumpmaster many times. I was starting to get accustomed to the pressure and the process. By the second week, I was in the groove and while I learned quite a bit, the mystique was wearing off. We made jokes like, ¨Don´t worry if your chute doesn’t open, you have the rest of your life to deploy the reserve¨. There was a studied nonchalance that the instructors and students alike affected yet under the surface we were serious and truth be told still focused by fear. We no longer swaggered or told people to ¨Stand in the Door!,¨ because that was not cool. We were ¨special¨ and we shunned those who still talked in the vernacular of regular static line parachuting.
Trichet to Bernanke: “Did you pack your reserve?”
By the time I went to the free fall jumpmaster course, I had over 300 jumps. I looked at the course as a “check the box” exercise because by this time I thought I had ¨been there and done that¨. I still got butterflies before every jump but the process had become almost routine. My complacency lasted until after lunch the first day. The senior instructor took us into the classroom and proceeded to show us accident scene videos and photographs. Gruesome. Then he pointed out that of all the fatal free fall accidents since the military started keeping track of the data, over 85% involved jumpers with over two hundred jumps.
Was this just the odds catching up with the most active daredevils? No. The problem was jumpers became complacent about the danger. What was once extraordinary became routine. The focus gained through fear subsided. The dangers had not changed in any way but ¨old hands¨ no longer felt compelled to focus on them. Subconsciously, they ignored the dangers. They would cut corners. They would skip an important safety check. They ignore their altimeter and just estimate the altitude from experience. They daydream through the pre mission brief. Subconsciously we adopt the mentality that a lack of negative outcome in the past, in some way negates the increased risk. Kind of like a turkey the day before Thanksgiving. They ignore the perils and get away with it, which in turn reinforces their belief that the dangers are less than they are. Until one day…..
And this leads me to the point of this walk down memory lane. I am convinced the majority of market participants now feel they are ¨old hands¨. Many fund managers and individual investors have ¨Been there. Done that¨. Central bankers have defied death and lived to talk about it. They have been ignoring the obvious danger signals and getting away with it.
It seems as if every day there is more catastrophic market moving bad news that… well… doesn´t move the market. Housing starts at the lowest level ever… don´t sweat it. Unemployment still hovering around 10% officially… no big deal. Budget deficit increased by… who cares.
As I read about the goings on in Jackson Hole this past weekend I could not help but be reminded of the videos of fatal freefall accidents. Each and every one of the bureaucrats seemed to have adopted the idea that a lack of negative outcome somehow obviates the risk. But don´t worry when their main policy fails they will have the rest of their lives to deploy their reserves. ¨Stand in the Door!¨ It is a long way down and it is going to hurt.
This Month
This month we bring you part two of our coverage of Peru. Last month we talked about the public markets. This month we focus on the entrepreneurial and lifestyle opportunities in Peru with an emphasis on the Cusco area. Cusco is transitioning from solely a tourist destination to a resources boomtown. For the intrepid amongst us, Cusco could be a good place to set up camp.
We will then focus the remainder of the edition on why after a year of observation we think it is time to get busy with our vulture activities in the southern cone region of South America. We first brought up the idea a year ago but for a variety of reasons the timing has not been right until now. We will explain to you how we intend to go about investing in land and other real assets. We provide a way you can join us in this endeavor. We also offer up some ideas on how, if you have the time and resources, to give it a go on your own.
Upcoming Events
I´ll be in Cafayate for the upcoming event at Dough Casey´s La Estancia de Cafayate from the 20th to the 24th of October.
I´ll be speaking at the Freedom Fest cruise and conference in Buenos Aries on the 13th of November. Mark Skousen and the rest of the crew at Freedom Fest have put together a cruise that promises to be both interesting and enlightening. The details are still being firmed up but a trip around Cape Horn in a luxury cruise ship filled with like minded freedom seekers cannot be a bad experience.
If you have been contemplating a trip to this part of the world it would make sense to try to come down for one or both of these events. If there is enough interest we would be willing to put together a Without Borders get together between the two events. We could even combine it with a tour of some of our vulture opportunities. If you are interested please email admin@withoutborders.com
Yours in Exploration,
Fitzroy McLean
Chief Bon Vivant and Speculator
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