When Advertising Tries To Predict The Future

A new ad by Citizens Against Government Waste (Cagw.org) has gone viral and is sparking some controversy. CNBC's Mark Haines completely lost his cool about it, telling the Cagw spokesman to just LIGHTEN UP.

. . .

A Chinese professor lectures a class of students in the not-too-distant future:

Why do great nations fail?
The ancient Greeks . . .
The Roman Empire . . .
The British Empire . . .
The United States of America.
They all make the same mistakes.
Turning their back on the principles that made them great.
America tried to spend and tax itself out of a great recession.
Enormous so-called "stimulus" spending
Massive changes to health care
Government takeovers of private industries
And crushing debt.
Of course, we owned most of their debt . . .
So now they work for us.
(laughter)

. . .

This is great copy to be sure. It's a dynamite ad. No question. As a former Mad Man myself (who initially chose Madison Avenue over Wall Street because I was bad at fractions), my first word was WOW. But as soon as it was over, I wanted to take the other side of the trade.

Don't get me wrong: I agree with every word. The premise is dead on. But to me it's no different than Paul Macrae Montgomery's magazine indicator.

By the time a trend makes it onto the cover of a magazine, it's ripe for a reversal. Thus, by the time the belief that China will soon be running the world makes it to some copywriter's desk in NYC, it's the same thing as a DSI reading of 90% bulls.

I'm not a China Bull. Someday I will be. But not now. China is headed for an implosion as much as we are. What will cause it? Their bloated US treasuries position will when the USD confounds everyone and spikes higher than almost anyone expects . . . not on fundamentals, but from what occurs in a credit contraction.

Furthermore, every word in this ad cuts both ways. China is doing all the same things that we're doing. Beware of foregone conclusions.

Watch the ad here.