More reactive than flourine. Funnier than boron.
Welcome to the Financial Zud

This post is one of my favorites. I originally posted it back in April of last year. Since then the housing market has either stabilized or we’ve become inured to its crapitude. I’m going with the latter. Whatever the reason, the story of Mongolian goat farmers still has odd parallels to our own plight.

There are parts to this story in the Wall Street Journal that are truly tragic. No one wants to think about the utterly poor becoming utterly poorer. But the very foreignness of the Mongolian cashmere goat farmers juxtaposed with the same tendency to overextend on credit that is being seen in the American housing market makes for an interesting story. And then you get sentences like this:

“Some herders, betting on continued strong cashmere prices, borrowed more than they should have, and spent the money on the Mongolian equivalent of conspicuous consumption: motorbikes and solar panels to provide electricity for their tents.”

There you have it: Whether it’s trying to flip already overpriced condos in Miami or buying a motorbike to trek from one electricized tent to another, consumers will sometimes behave foolishly. When you get lots of them all behaving badly at once, you get a zud.

Little piece of advice: If you’re willing to make the trek, it sounds like buying depressed cashmere goats (meaning the price is depressed, not the goats themselves) might be a bargain. Hold on to them long enough and you might corner the market. I don’t know if I’m kidding.

Leave a Reply