Gustavo Ballvé on May 4th, 2010
Home, Portfolio Management, Risk management

A recent story about the increased credit lines at BNDES (Brazil’s development bank) highlighted an issue dear to us: government spending. There have been many other initiatives that translate into increased spending, and one is reminded that this is an election year. The temptation to focus on the primary fiscal surplus and on the (potentially) positive short-term effects could, for the less skeptic, hide the long-term dangers of this growing spending binge. We highlight a book on this subject and this post with Charlie Munger’s parable about squandering away the wealth of a nation (complete with a link to Buffett’s Thriftsville vs. Squanderville classic piece).

Memos From the Chairman, the book from which we’re taking the following quote, should be mandatory reading for everyone – but especially for government officials. One phrase that seems especially applicable: “When mortals go through a prosperous time period, it seems to be human nature for expenses to balloon.”

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