Archive for the ‘financial metldown’ Category

From Enlightenment to Onlinenment

May 4, 2019

Peering way back in human history, we find . . . generally, the battles have indeed been won by the strong, and the races are usually won by the swift of our species.

There are exceptions, for sure, but generally you know it’s true. Them who know how to throw their weight around  usually manage somehow to outweigh the rest of us.

The people who manage to work, or fight or compete, to the top of the heap—those folks pretty much stay on top of things until some group or faction that is lower on the pecking order manages to muster enough money, or strength or discontent or firepower or political power to throw the bums out and usher in a new regime of wealth, or weapons, or wherewithal to take charge of things and call the shots.

Throughout history we talk about this and wonder about how to deal with it in ways that are fair and equitable, and maybe even civil.

In the last 300 years of pondering these issues, we’ve moved from the Age of Enlightenment, through the Age of Development, and now we’ve progressed into the Age of Onlinenment.

Three centuries ago, power was all about royalty. The royal houses pretty much ruled the world. They divided it up. Now and then they fought battles, or even wars, to re-draw the boundaries of ownership and authority and hegemony etcetera etcetera.

The printing presses had gotten in gear back in the 1400’s; over time all those mechanically copied manuscripts began to make a difference in everything that happened.  Ideas got spread around through documents and books, and people began to think more, exchange ideas and information more, think differently about themselves and the world they lived in, and . . .

People got smarter, or at least they thought they were smarter. At any rate, they had more information (more data!) to work with. Many of these smart folks figured out that they could work their way out of indentured servitude or serfdom or whatever royal arrangement had been holding them back.

So they moved off the estate, and into town; there they set up shop, doing business, making goods and services that people needed.

Capitalism was born. . . little people doing business and making it on their own.

Along with capitalism came the age of Enlightenment, a time in history when more and more folks were figuring out that hey! we can do this this thing we don’t need the bluebloods up in the castle to tell us what to do.

Although it took a century or two for these changes to really make a difference on a societal level, eventually the newly emerging middle classes had enough members and resources and smarts and clout to push the old fuddy-duddy royals out of power.

It was a long bloody process. Our American revolution busted out and changed the world forever.

Revolutions (1)

The French did an even bloodier version when they guillotined the Bourbon monarchs. As the proletarian uprisings gathered steam across Europe,  Napolean and Marx and hordes of discontented Europeans got out in the streets to rearrange the economic structure of things into a state more fitting to their demands.

Eventually, the Bolsheviks in Russia managed to run the royal Romanovs outa town. The new revolutionizing proletarians cornered those royals and put  bullets into their fair-haired Romanov heads.

Further down in Europe, the same Revolutionary zeitgeist was burning hot. 20th-century Liberation busted Western civilization out of its old royal antiquities. Along with the supposed modernizing came a bloody mess called the World War I.

Archduke4

When the guns were finally silenced in 1918 and the smoke cleared and the dust settled, the world was a different place.

Most of the royal houses had been run out of their big houses; what was left of them were cornered into ceremonial roles, and a new way of doin’ things became the order of the day.

Our yankee country country here had a lot to do with the way things turned out. After we had sent King George and his reds back to Britain with their tail between their legs, we had a whole, vast, 3000-mile continent just waitin’ to discover what the steam locomotive and the motorized tractor and the combine and the cotton gin and the blast furnace and everything from Pittsburgh to Pacific was all about.

And by the time we got to the Pacific, by crackies, the world was mechanized.

We had wrought it into a whole New World.

However, as things developed here in the 19th-century in the big wide bustin’-out USA, the ancient hierarchical tendencies of the human race had re-asserted themselves the fray, and before you know it—in spite of all the wide open spaces and new opportunities— we were back into a situation where the rich got richer and and the poor got poorer.

As the tycoons and magnates—Carnegie, Rockefeller, Bell, Edison, Morgan—got America all cranked up on oil and gas and electrical power, they formed companies.

By ’n by, them companies grew and prospered, and—long story short—those little startup corps from our late-19th, early 20th-century developments eventually morphed into giant corporate behemoths.

Even so, every now and then throughout the last century, a big economic reset button gets pushed somewhere and the forces of mankind whack the hell out of all our wealth-gathering institutions.

The biggest Depression hit back in ’29 and hung itself around our necks until the big guns showed up to blast us out of the trenches. After the Second Big War, we had a big round of wealth-spreadin’, middle-class widenin’ expansion with more folks than ever before jumpin’ on the middle and upper-class band wagons.

It went on a half-century or so, with ups and downs along the way but most everybody gett’n’ at least a little better off along the way, until ’08 when another whopper hit wall street; it dumb-struck the powers-that-be for a few weeks until they got their act together and yacked their way into a deal in which We the People baled them and ourselves out of what would have been disaster, or so the tale is told.

Anyway, here we were a century+ past those robber barons and big wheels and under-the-table deals, and the corporations are thought to be running the whole shebang.

19th-century: the Royals, kings and queens, monarchs, dukes, earls, counts, etcetera etcetera

20th-century: CEOs, CFOs, Chairmen of the Boards, etcetera etcetera

All along the way, a whole lotta regular folks have jumped onto the Corporate bandwagon and wiggled their way into some of the booty therof. Out here on the coasts and in Flyover country, a whole lot more of us consumers are in a big way dependent on this Corporatized way of doin’ things.

By the late 20th-century—and now going into the 21st—the upper-middle-class’emites who keep the electrons and the debits and the credits and the assets  hummin’ along through that vast Corporate power Web— they are pretty well fat n’ happy, like their blueblooded ancestors.

Their modern morph-up into class and privileged status was Corporate-fueled, not Royal-based like in the earlier versions.

Especially since ’08 when the whole financial world blew apart again and We the People bailed the Bankers and their kissin’-cousin Corporate mavens out.

In this round of history, the Discontents among us not using the printing press so much to drum up all this protest and pushback we see rising . This time it is more about the the Twit and the Web and the Net.

We’ve progressed past Enlightenment, past Development . . .

to Onlinenment.

DigitHeads

And by means of this digitized Onlinenment, folks are gettn’ all hot n’bothered again, and workin’ themselves into a tizzy about those same ole inequality-breeding patriarchal tendencies, which have forever reared their privilege-seeking heads into positions of authority.

We find ourselves once again passing Go. Roll the dice and collect $2 million. And so the rich get richer and the poor get poorer. What else is new?

But this time the disruption is not about throwin’ out King George or King Louie or Czar Nicholas or the Archduke of Serbia.

In this round, its about throwin’ out the Corporate mavens and their kissin’-cousin Politicians, and maybe even the Digitheads along with them, and then replacing them with . . .

um . . . with what?

Y’all Discontents be careful now. We don’t want any more Stalins or Maos, or even Chavez. Let’s talk about this.

Go easy on us who are fellow-travelers in this planetary arrangement. Let’s not throw the baby out with the bathwater. Don’t wanna throw the can-do out with the carbon.

Glass half-Full

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Where to now, Homo Developus?

January 16, 2019

Everybody knows that a few years ago we had a big economic breakdown. There were many reasons to explain  what happened in 2008.

Let’s step back in time a little and consider what has taken place on Planet Earth.

During the 1800’s and 1900’s our developed nations undertook a vast, worldwide surge of industrial development, which was accompanied by a universal expansion of business and corporate prosperity. This hyper-expansive phase of human development required very large-scale extractions of natural resources, which were then transformed into mega-stocks of consumer goods.

An abundance of consumer goods brought forth an abundance of consumers.

Consuming.

Consuming the goods, consuming the planet.

The end of the 20th century brought a vast slowdown. It happened in the fall of 2008, and regardless of what the bullish analysts and stimulus-chasers declare, we are still mired in that big slowdown of ’08.

And will continue to be. This is going to morph into a vast leveling out. The industrial age is over. Our planet will not tolerate another 200-year extraction expansion.

Now we have entered into the Age of Sustainable Technology and Appropriate Industry.

And herein a question arises.

Who will run the world?

Is there a cartel of Carnegie, Rockefeller, Edison and JPMorgan-types out there who will forge a new system to transform the old Industrial Infrastructure into the new Sustainable Society?

As the next surge—the post-industrial phase— is being initiated by a new breed of Industrialist . . . the Gates, the Jobs, the Bezos and Buffets . . . the industrialized Civilization stumbles into a new Electronified Zone.

A digitized twilight zone, as it were.

In the wake of the great ’08 Slowdown, we encounter a host of questions that define the logistical problem of where to go from here.

During the Investment Segment’s breakdown of ’08, a lot of very complicated financial engineering became unwound.

One financial analyst, John M. Mason, recently offered an explanation that includes this analysis of what happened in the financial world during the decline of our industrializing phase:

But, in the developed world, the presence of lots and lots of liquidity means very little in the way of corporate capital investment. The environment of credit inflation, built up over the last fifty years of so, has created a culture of financial engineering in the business community and, consequently, corporations act differently now than they did when most of the current economic models were constructed. Government stimulus gets built into greater risk taking, greater financial leverage, and financial investment, like stock buybacks.

   (https://seekingalpha.com/article/4233178-supply-side-world-europe-well-united-states?ifp=0&app=1.)

So it seems to me that the financial guys—the wallstreet wheelers and dealers, etc—having running out of real new industrial infrastructure to invest in, turned to MBS schemes and CDO games in order to keep their game going. Instead of their oversized financial whirligig running on old Industrial Growth stimulants, they rigged it to run on the fumes thereof.

Now in a post-industrial age, we find ourselves as a species, Homo Developus, scratching our heads and wondering where do we go from here?

It just so happens that, in the wake of the Great Industrial Expansion of Planet Earth, there emerges a vast bureaucracy of Smart People—number crunchers, economic theorizers, technocrats, academics, programmers, bureaucrats, not to mention the mysterious ghosts of AI —who propose to reconstruct the detritus of the industrial age into a systemic quasi-social Union that will make sure everybody is taken care of.

And so I’m wondering, what’s the best way to administrate such a civilization?

What’s the best system for governing a federation of post-industrial nations?

What’s the the most effective strategy for managing a cushy, highly-developed Society?

What’s the most humane political structure to assure income and health for all citizens?

Should Europeans, for instance, appoint multiple layers of bureaucracy to enforce labor laws so that every person has a guaranteed income?

Should the State take control of business so that everybody gets a minimal piece of the pie?

And these philosophical, or sociological questions arise:

What motivation compels some individuals to seek opportunity and then develop that opportunity into abundance and prosperity?

What drives the go-getters to excel in economic pursuits? What motivates them to acquire work, money, property, resources, and then manipulate those assets into an overflow of wealth?

What incentive impels them to take care of themselves and their families?

On the other hand, what compels some other people to, instead,  take charge of bureaucratic agencies in order to administrate a Society that assures everyone a minimum of economic assistance?

What drives some analytical people to write laws and devise policies for systematically managing governmental bureaus to assure that everyone is taken care of?

Who is in charge here?

Who is going to run the world?

Will it be the go-getters, the pioneers, movers and shakers, developers, entrepreneurs, rule-breakers, industrialists, business mavens?

Or will it be the wonks who manage the world—the academics, the specialists, bureaucrats, rule-makers, policy-crafters, the tweakers of governmental largesse?

EURomeHdq

Consider Esther Lynch’s observations:

The ETUC has watched the rise in precarious working conditions in Europe—platform working, zero-hours contracts, bogus self-employment and so on—with deep concern. Research in the UK found that young people on zero-hours contracts, for example, were far more likely to report mental and physical health problems than their counterparts in stable jobs. A study by the University of Limerick in Ireland warned that people on non-guaranteed hours could become ‘trapped in a cycle of poverty which strengthens employers’ control’, generating a fear of being penalised if they raised grievances about working conditions. In response, the Irish government has taken steps to prohibit the use of zero-hours contracts, unless the employer can show a genuine business need. Guaranteeing transparent and predictable working conditions would have wide-ranging benefits, in terms of workers’ health, work-life balance and employee retention.

  (https://www.socialeurope.eu/tackling-insecure-work-in-europe)

What does the peaceful development of Civilization require? Management by one, or the other, of these two types? Or Both/and?

Is Civilization founded upon a principle of every man/woman for hmrself?

Or will it settle into BigBrotherSister administering a vast Guarantee for All?

Or something in between.

Keep your eyes open to watch what develops.

Smoke

Feb5, 2018

February 6, 2018

Floating in New York Harbor, this message was found in a bottle:

Sorry to burst the bubble here but

What the hell happened at 3 o’clock?

DowJ*1:5:18

Somebody yell fire in crowded theater?

Thundering herd, caught up in the Smoke and mirrors!

Blindsided by  a Flash Crash?

Blame it on the ‘bots!

Gotta be them damn short-selling ghosties

in the machine

again

Oh . . . what the hey. . .

The last thing I remember, Doc

I slid into the curve.

Downward, I remember

Downward, I can tell you that.

In the winkin’ of  an eye, and suddenly it’s every man for himself—

and the thundering herd turns tail, reverse

like some slumbering bearish curse,

Stampede!

Blind-sided by the ‘bots, or so I’m told.

Or did Jerome grab  the punchbowl

Already?

Did he pull the plug?

Did he pull  the rug

out, already, from under, 

toppling now, asunder

the elephant in our room?

Watch out!

We’re coverin’ our assets here. But it’s hard to hit

a moving target.

So I’ was thinkin’

This is more dire than a bull in a China flop;

caught in a freefall only the ’bots can stop.

Or until the final bell doth drop

Hell! It’s 4 o’clock;

but I’m still in shock.

We didn’t see it coming, from near, nor far!

you know how your assets are?

What about my precious metals?

Now the dust settles:

Dust bowl

Super bowl

punch bowl, where have we landed?

America has disbanded.

Yet the Eagles have landed.

Where the Eagles gather—’tis there the body’s found.

No more Patriot tricks to score touch down.

No, nay, hardly a sound

there’s no more joy in BeanTown;

mighty Brady has struck out!

Dynasty done, without a doubt.

Who’d’ve thunk it,

equivalent to a Philly gridiron dunk it!

Oh, you couldn’t hear the clock stop

as we watched the black swans flop.

No, we ne’er did detect that long-dreaded pin prick

as it burst our bubble like an e.d.wick,

yet we caught a twit from way, way down

in the beltway, political town

struck dumb now with some eerie Nunez memo

more cryptic than a dreary Ruuskie demo.

But I remember

it was 3 o’clock and then . . .

That’s all she wrote.

Glass Chimera

Yes, Toto, we’re in a brave new swirl.

January 28, 2018

Today while perusing a post on the Seeking Alpha financial network I came across what appears to be a very sensible explanation of what we see in the world of finance and business today.

This no-nonsense analysis is occasionally echoed by other writers on the SA site, most notably Mr. David Stockman, former budget director for President Reagan.

He was a high-flyer back in the day, the pre-Greenspan days.

But here I make reference to a different contrarian analyst, Mark A. Grant,  upon whose article I stumbled upon this morning.

  https://seekingalpha.com/article/4140703-universe-edge-restaurant?sht=p3a1ld&shu=8wcf#comment-77507865

From a distance, I’ve been following the contrarian school of thought ever since the fall of ’08. I say “from a distance” because I am neither an economist, nor a significant investor. I am a mere citizen who happens to be a consumer, an American, an author and a semi-retired person, age 66.

This contrarian school of alarmist financial analysis generally demonstrates a perpetual amazement; their astonishment revolves around the credit-mongering house-of-cards built by the central bankers of our preset world (the Fed, EuroCBank, Bank of Japan, People’s Bank of Japan, etc.). It’s not that the contrarians have much respect for of the central bankers’ delicate arrangement of interlocking currencies and trade incentives; rather, their astonishment arises from the mystery of why it has not yet fallen apart and produced a new crash.

You see, this new international construct is not founded upon traditional economics, but rather (as it appears to this layman) upon that (at the time) new-kid-on-the-block upstart school founded in the 1930’s by Mr. Keynes; it’s all about governments and banks perpetually tweaking national/international money spigots to produce certain desired effects.

Our current zombified house-of-cards scenario has been at work for a decade or so now, ever since the crash of ’08, with its aftermath of Great Recession or great whatever-it-is.

Getting back to the source of this present article: This morning I was reading Mr. Grant’s take on the present situation and comparing it for the umpteenth time to the contrarian undertow that continues to make perfect sense. This bearish complaint corner has been going on for so long I’m beginning to wonder if the fiat-wielding central bankers have actually managed to change, by their manipulations, the fundamental nature of money.

Maybe we actually are now in a brave new world where the old rules of debit/credit will never again apply.

With all these electrons flying around the planet–all these monetized digital representations of presumed wealth and bank-enabled assets–haven’t we truly ditched the old gold-backed world of currencies-dollars, pounds, francs, marks, drachmas, denarii, Euros, rubles, shekels, yen, yuan, SDRs and zlotys?

Could Bitcoin and such be nothing more than a flash-in-pan death-throes sparkle signifying the end of our great age of post-BrettonWoods expansion? 

Might this extended wave of central banks’ Quantitative Easing actually turn out to be the debt-driven tidal wave that propels us into a land that prime forgot, where all the rules and practices of days gone by are tossed aside forever in the liquidity flood and trash heap of history?

ShipWrek

We’re getting to a precarious place now where the only solution will be to tear up the score-cards, balance sheets, and start over. The central governments of the world are forever indebted to the central banks of the world. It certainly seems that way to this observer. I’ll be surprised if we ever get back to what Mr. Smith called “the wealth of nations.”

We ain’t in Kansas any more, Toto. Exactly where we have landed is unclear. And it just might be that tapping our ruby-slippered heels of old-school analysis are gone with the wind.

When this whirlwind of fiat-instruments does wind down to a dull roar and all the chips fall where they may, who/what institutional entities  will have wrangled control of the new asset-spewing beast? Whatever that entity turns out to be–it (they) will be in a position to dole out the newly-zombified assets to the world’s surviving movers and shakers. I guess most of us out here in lala land will be quakin’ in our boots.

As for us commoners, we may all of us have to settle for a mere meal-ticket while the big chips get re-assigned.

A meal-ticket  on a card or a chip, of course.

What troubles me is: what new rules or allegiances will be demanded by the powers–that-be?

What will it cost us, John Doe/Jane Smith, to even get in the game?

King of Soul

Austerity or Stimulus?

February 25, 2017

Well this is an improvement.

When I was still a gleam in my daddy’s eye, Germany fought a world-sized war against France. But now, in 2017, all the obsolete ideology that then fueled both fanaticisms–fascist v. communist–has withered down into a battle of ideas.

Fiscal ideas, like whether budgets should be balanced, or put on hold until things get better.

From a Peace vs. War standpoint, I’d say that delicate balancing act is an improvement, wouldn’t you? Budgets and Economic Plans are, theoretically, much more manageable than tanked-up military campaigns.

Now Germany and France– those two nation-state heavyweights whose fiscal priorities set the course for the rest of Europe–they are getting along just fine now. They expend financial energies trying to keep the whole of Europe humming along on all cylinders. Budget deficits that drag down Euro economies are generated mostly in the lackadaisical southern  economies–Greece, Italy and Spain.

But those two mid-continent economic heavyweights–France and Germany, function as fiscal opposites, polarizing European values and budget priorities in opposite directions. They are two very different countries; and yet Germany and France are not as opposite as they used to be. A lot has changed since they finally made peace back in 1945.

At the time of that last Great War, early 1940’s, Germany was suffering through the death-throes of a dying monarchy. What was left of the Kaiser’s authoritative legacy had been lethally manipulated into a world-class death regime by a demonic tyrant who wore an odd, obnoxious little mustache on his flat German face.

France up to that time was still stumbling through a sort of awkwardly adolescent stage, having booted their kings and queens out back in the early stages of the industrial revolution, and then replacing, in stages, the ancient monarchy with a struggling new Republic.

What the French did as the 18th-century came to a close was similar to what we Americans did, but different. We had ditched King George III in 1776. The French cut off Louis XVI in 1792. On the other side of the Rhine, the Germans kept their Wilhelm top dog hanging on a thread until the Allies ran him down in 1918.

We Americans did a whole new thing after we rejected the old wineskins of monarchic government back in 1776; we had a lot going for us–a vast, nearly-virgin continent that stretched out for 3000+ miles, with plenty of room to grow,  and to expand our new-found explorations for Life, Liberty and Pursuits of Happiness.

The Europeans–neither the French nor the Germans–did not have all that fruited-plains expansion space like we had. They were cramped up over there in the Old World.

Having wielded a fierce guillotine ruthlessness upon their king and queen, the French tried to spread the wealth all around, ensuring that everybody got a chunk of it. They had wrung a blood-stained liberte from the palaces of privilege in 1789. Over the course of the next century and a half, they generally moved leftward the whole time, toward an egalitarian idea of solidarity.

The Germans have always tended toward authoritarian leadership, which is one reason why Hitler was able to pull off the abominations that he did. But we Allies put that to an end in 1945.

Thank God.

Now in the post-WWII Europe, the Germans have turned out to be pretty good kids on the block, considering all that had happened back in the day. The last 3/4 of a century has seen a remarkable recovery. They went through some serious changes, rebuilding after  losing two wars, and then being divide into two different countries.

Since 1990, when Germany became united again into one country, those krauts have established a pretty impressive record. They now have the strongest, most stable economy in Europe.  One reason it turned out this way is: the Germans have historically been, by necessity, very disciplined, rational people and they know how to get things done.

The French are different from that. You gotta love the French. As the Germans have made the world a better place with their great music (Bach and Beethoven), the French have brightened and lightened our worldly life with their very lively, expressive and impressionistic art, coupled with their unbridled Joie de vivre. And let’s not forget the original architectural piece-de-resistance of the Western World. It was French creativity married to inventive 19th-century industrialism that brought us the Eiffel Tower in 1889.

ParisGargoyl

The French do progress with style and artistry; the Germans get it done with impressive efficiency and precision.

As an American who has geneologic roots in both cultures, this fascinates me.

Their two different attitudes about generating prosperity also encompass, respectively, their approaches to solving money problems.

Or more specifically. . . solving “lack of money” problems.

A new book, Europe and the Battle of Ideas, explains how these two nations, as the two polarizing States of modern Europe, each lead in their own way to set policy, together,  for solving Europe’s financial problems. Their tandem leadership is enhanced by their two very different strategies.

The simplest way to describe their treatments of European deficits is this:

The Germans are into Austerity; the French are into Stimulus.

Or to put it into a classic perspective:

The Germans want to balance the books,  thereby squeezing all governments and banks into economic stability. The French want the assets to get spread around so everybody can have a chunk of it.

How do I know anything about this?

This morning I saw Markus Brunnermeir being interviewed; he is one of the authors of the new book, Europe and the Battle of Ideas.

  https://www.socialeurope.eu/2017/02/europes-future-will-settled-battle-ideas/

In this fascinating, very informative interview, the questions are being posed by Rob Johnson, President of Institute for New Thinking, whatever that is.

Together, these two guys explore the two basic problem-solving approaches to working out Europe’s economic deficiencies. And it just so happens that the two main strategies are related to those two old nationalized culture, described above, between Germany and France.

Sounds simplistic perhaps, but this comparative analysis makes a lot of sense when you hear these two knowledgable men talk about the present condition of economic Europe.

So, rather than try to explain it to you, I’ll simply leave you with this list of characteristics, as identified by. Mr Markus Brunnermeier. The list identifies how each country’s budgetary priorities contributes to a strategy for solving Europe’s fiscal woes.  My oversimplified version of it  looks like this:

France

Germany

1.Stimulus

1.Austerity

2.Liquidity

2.Solvency

3.Solidarity

3.Liability

4.Discretion

4.Rules

5.Bail-out

5.Bail-In

Consider these two lists of national characteristics as two different strategies for solving large-scale economic problems.

Here are a few notes I made while watching Mr. Johnson interview Mr. Brunnermeier:

For French, the problem is always liquidity. Stimulus will flush money out of markets again.

Germans see problems as solvency difficulty. Fix the fundamentals. Don’t throw good money after bad.

French: If you see it as a liquidity problem, just bail them out.

German. If you see it as solvency problem,  Bail in, to avoid future hazards. Bail-in means: Bond holders who essentially gambled with a country or bank and  then reap the gains on upside– they should take losses on downside.

There was a radical shift in attitudes in Europe over the Cyprus bank crisis in spring 2013. Who pays? Who covers the losses?

. . . Bail-in or bail-out?

French fear systemic risk so they tend toward governmental bail-outs.

The Germans, on the other hand, see crisis as an opportunity to address and solve the systemic deficiencies. So penalize  the depositors/ investors; others will learn from that, and you will have bank-runs in other places. Such circumstances provide incentives for institutions and individuals to take responsibility for their own actions and investments.

Just how the Europeans get all this worked out, we shall see in the days ahead. And the working-out may provide some lessons for all of us.

Smoke

Hilary, Liz and Dodd-Frank

February 21, 2017

Violin

Oh, there was a time, when I was a young man, when I would fiddle around, and that was nice enough for a while.

Then life came and went.

Nowadays, I find myself content to merely listen while life slips by.

In ages past, a maestro such as Felix Mendelssohn could  imagine something incredible; he could then summon up in his own mind and hands– an exquisite composition, an intricate stream of vibrations–as sublime as any that could ever be coaxed from a mere box constructed of wood and wire. He could then write the composition. Then, 170 years later Hilary could set bow to instrument and, with help from the orchestra, make it all happen so perfectly.

https://www.youtube.com/watch?v=o1dBg__wsuo

There’s a reason why my fiddle has been set aside all these years. Why bother? There’s somebody who can do it better. There’s somebody out there who can, in fact, do it perfectly.

Just listen. But I get to thinking. . .

Years go by. We pay attention, try to figure things out. There’s always somebody out there who can do things better than we can. Leave the complicated stuff to experts. And listen. Listen and learn. Maybe you’ll learn a thing or two.

Just daydreaming now; I think of Sally Field in Forrest Gump when she was playing his mother and she said life is like a box of chocolates; you never know what you’re gonna get.

Think about 2008. Everybody just lollygaggin’ along. . .then whoosh! well, you remember what happened. Everybody’s shell-shocked. Uncle Hank stammering on the Tube. They had to twist Congress’ arm two or three times before they’d come up with the money to fix the mess, at least temporarily.

Then the experts get trotted out to analyze, to testify, to figure what the hell happened in stock markets that made the thing come crashin’ down–something about market manipulations of MBS’s, unforeseen incredibilities of CDO’s, the incredulous defaulting of credit default swaps blah blah blah

As the thing unwinds, along come the explanations, the excuses, the wagging fingers, the committees, the commissions, the oversight agencies get rolled out, cranked up. Republicans in shock because Obama’s in. Democrats trying to figure out what went wrong and how to fix it. Democrats got to fix everything, so what do they do. . .

Let’s fix everything up, they say.

Ok. Obamacare and Dodd-Frank.

Years go by. Big shock when Trump comes blasting’ into 1600 Pennsylvania Ave after those 8 years of Mr. Smooth.

Now this morning we hear Amy and Juan on the radio, and here’s Senator Liz whining about how the new Republican whirlwind wants to wind down Dodd-Frank, which was supposed to be the big fix, the big Democratic fix.  I mean, she’s a little bit crazy, like all Democrats, but there’s one thing about Liz, she can play the rhetoric like Hilary plays the violin. It’s no wonder Mitch had to cut her off last week. Anyway,  Liz is saying:

“Commercial and consumer lending is robust. Bank profits are at record levels. And our banks are blowing away their global competitors. So, why go after banking regulations? The president and the team of Goldman Sachs bankers that he has put in charge of the economy want to scrap the rules so they can go back to the good old days, when bankers could take huge risks and get huge bonuses if they got lucky, knowing that they could get taxpayer bailouts if their bets didn’t pay off. We did this kind of regulation before, and it resulted in the worst financial crisis since the Great Depression. We cannot afford to go down this road again.”

I mean, Liz might have a point there. If things are so ROBUST, why do we still get this feeling about the 20,000+ Dow? Is it deja vu, or deja due, or prescience, maybe too much twitter or not enough facebook, or a rerun of common sense or what? Maybe it’s all just a bunch of hot air blowin’ around and we keep wonderin’ about the whole house of cards but we can’t really put our finger on what’s wrong cuz you know the answer my friend is blowin’ in the wind and life is like a box of chocolates anyway, a mere lala land where we think we got it figured out but really we don’t.

Although I do have to remind you, Liz, since I am a registered Republican: we can’t fix everything. If we could, and if we did, why, how boring would that be?

So my advice to you is we’d best leave the fiddlin’ to the experts. Sooner or later we’ll all have to face the music anyway.

Glass half-Full

A New Bretton Woods?

August 1, 2016

We were in Rome about a year and a half ago, as part of a traveling celebration of our 35th wedding anniversary.

One evening as we were lollygagging through the busy rain-slicked streets and sidewalks, we passed in front of a very special building. It was the Rome headquarters of the European Union, or “EU”.

I wanted to take a picture of the building’s entry, because that is what tourists do–take pictures of important places. Seeking a broader view, I crossed the street. While positioning myself and the phone to snap a pic, the guard across the street noticed my activity. He started waving at me frantically, indicating that what I was doing was not permitted.

Excuse me. I was taking a picture of a public building.

In America, we take pictures of .gov buildings, because we have, you know, a government of the people, by the people and for the people, which means, among other things that the people can take pictures of their headquarterses (as Golem might say.)

Is this not the way you do it in Europe? No pictures of the RomeEU headquarters?

Nevertheless, here is my smuggled pic:

EURomeHdq

If you squint at my little jpeg here, you may discern the guard’s upraised right alarm, a gesture of command intended to communicate a stop order on my touristic activity. It vaguely resembles another raised-arm signal that was in use in Europe 75 years ago, during the regime of Mussolini and that German guy who considered the Italian dictator to be his own puppet.

Or maybe I’m being too cynical about this incident. Maybe the guard was saluting me in some way, acknowledging my importance as an American tourist in the city of Rome.

Now, a year and a half later, this morning, seated comfortably in my own humble domicile, back in the USSA . . . I was pondering the idea of government–whether it is truly “of. . .by the people”, or is it something else? Is it, as many citizens insist during these times of tumultuous societal change, actually an institution through which the “1%” (or as they said back in the old days, the “rich and powerful”) project their oligarchical manipulations upon the rest of us?

I was thinking about this after reading online an article about how the worldwide financial system that has evolved.

  http://seekingalpha.com/article/3993559-back-square-one-financial-system-needs-reset?ifp=0

In this Seeking Alpha blogpost, Valentin Schmid, as “Epoch Times” examines our international monetary system. His analysis appears to be generated from  a well-informed position in the world of money, assets and power.

Mr. Schmid raises the question of whether  the current (worldwide) debt load can ever be repaid, because there isn’t enough “real money” to go around.

This got my attention, because I have been thinking for a while that there isn’t enough “real money” to go around.

Haha, as if I knew about such things. I don’t know much about money; if I did, I would have more of it.

Anyway, Mr. Schmid’s question is answered by his guest interviewee, Paul Brodsky, in this way:

   . . . “I would argue central banks lost the ability to control the credit cycle. Some relatively minor event could trigger a series of events that creates the need for a sit-down among global monetary policy makers who finally have to acknowledge publicly that their policies are no longer able to control the system, the global economy, which is based on ever increasing demand through ever increasing credit.

And what might occur is a natural drop in output. So you’ll see GDP growth begin to fall. Real GDP growth across the world maybe even be going into contraction and that would spell doom for these balance sheets. And this is not something I’m predicting or trying to time at all, but the natural outcome of that would be a sit-down like a Bretton Woods where arrangements are reconsidered.”

   https://en.wikipedia.org/wiki/Bretton_Woods_Conference

So what is coming is, perhaps, this:

To compensate for a stalling of global productivity, the movers/shakers of the world may  construct a new,  top-down rearrangement of the world financial system. The purpose of this revision will be to fix the problem of not enough money to go around. Such an extensive reconstruction as this would be has not been done since the Bretton Woods agreement that was promulgated by delegates from 44 Allied nations in 1944.

In a 21st-century world inhabited by billions of inhabitants, our  accessibility to natural resources has heretofore been determined by how many holes we could drill in the ground to extract natural resources; and how many acres of crops we could plant to produce food; how many factories we could build, and so on. . . building an economy to work toward  spreading the bounty around.

In the future, however, we will be moving to a “knowledge” economy. Wealth creation will not be about how much you can dig in a day’s time, nor how much you can plant, nor what you can cobble together in your back yard or over on Main Street.

Wealth generation in the future will be determined by what you know, so start learning now.

The first three essential  things to know are these:

Reading, Writing, Arithmetic.

Well gollee, maybe it won’t be such a brave new world after all.

However this thing plays out, if enough of us can master these three skills, .gov of the people, by the people and for the people will not perish from the earth, we hope.

Glass half-Full

The American Deal

July 13, 2016

Way back in time, hundred year ago, we was movin’ out across the broad prairie of mid-America, slappin’ them horse teams so’ they would pull them wagon out across the grasslands and the badlands, and then blastin’ our way ‘cross the Rockies and Sierras all the way to Pacific and the promised land of California.

GoGate35

And it was a helluva time gettin’ through all that but we managed to do it, with more than a few tragedies and atrocities along the way, but what can you say, history is full of ’em: travesties.

Troubles, wherever men go– travesties, trials and tribulations. That’s just the way it is in this world. If there’s a way around it, we haven’t found it yet.

  But there has been progress too, if you wanna call it that. Mankind on the upswing, everybody get’n more of whatever there is to get in this life, collectin’ more stuff, more goods, services, and sure ’nuff more money.

Movin’ along toward the greatest flea market in history, is kinda what we were doing.

Taming the land, transforming the planet into our own usages, improving, or so we thought, on God’s original versions.

After that great westward expansion transference/transgression, had been goin’ on for a good while, and a bad while now that you mention it, we Americans found ourselves high up on a bluff overlooking history itself. At Just about that time, them Europeans had a heap of trouble that they’d been brewin’ over there and they dragged us into it on account of we had become by that time quite vigorous, grasping the reins of manifest destiny and ridin’ along, as so it seemed, on the cusp of history, seein’ as how we had been raised up on our daddy’s Britannic colonizing, mercantiling knee.

Then long about 1914, them Europeans dragged us into their big fatally entreched mess over there and we went and fought the first Big War, fought them high and mighty Germans that first time and when we got done with it and got back over here the world was a different place.

I mean the world was a different place, no doubt about it.

For one thing, everybody in the civilized world was so glad to have a little peace in 1920, we just went hog wild.

Everybody got out there a-workin’, roarin’ ’20s zeitgeist, scrapin’ crops out o’ the ground, building great machines, skyscrapers. Edison had electrified us; Bell had sounded the bells of modern communication; Ford had tinkered us into a vast new world of mass production with a horseless carriage in every garage and a chicken in every pot and and we were skippin’ right along like a cricket in the embers.

NewkDev

‘Til ’29, when the big crash came along.

  https://www.youtube.com/watch?v=39RKRelTMWk

Some folks said that Mr. Hoover, great man that he was, was nevertheless clueless, and so the nation turned to Mr. Roosevelt for new answers. FDR, young cousin of Teddy Roosevelt who had been the father, so to speak, of American progressivism– cousin Franklin D., Governor of New York, took the bull by the horns and somehow managed to breed it into a donkey.

So from Teddy’s bullmoose progressivism there arose, through 1930’s-style unemployed populist cluelessness, Americanized Democratic Socialism;  with a little help from FDR’s genteel patriarchal largesse, the New Deal saved Capitalism, or so it is said among the theoreticians and the ivory tower legions who followed, and are still following, in Roosevelt’s wake.

Well, by ‘n by, between Lyndon Johnson’s grand Texas-size vision for a Great Society, Clinton’s good-ole-boy nod to residual crony capitalism, and then the 21st-century-metamorphosing, rose-colored proletarian worldview as seen through Obama’s rainbow glasses, and now the upswell of Bernie’s refurbished wealth redistribution wizardry– we’ve turned this corner into a rising tide of  flat-out Democratic Socialism.

It will be, quite likely, soon inundating the tidal basin inside the beltway as in 2017 we slog  into the mucky backwaters of full-blown Americanized Socialism, dammed up on the other side of the slough by that other guy whose oversimplified version of the nation and the world seems to want to land us in a brave new world of American National Socialism.

And who knows which way this thing will go; only time and the slowly softening sedentary, dependent American electorate can tell.

Looking back on it all, today, my 65th birthday, having lived through Nov22’63, April4’68, 9/11, yesterday’s disruptions wherever they may be, and everything in between, I find myself identifying with all the old folks whose weary outmoded facial expressions bespoke disdain,  while I traipsed errantly along life’s way. Here’s to all them ole folks who I thought were a little out of it, one brick shy of a load, peculiar, decrepit and clueless. Now, I can relate.

How I wish America could be back at real work again, like we were back in the day.

We’ve pushed through vastly extracted frontiers that yielded to massive infrastructure networks punctuated with skyscraping towers of steel and concrete. Now we’re lapsing into solid-state, navel-gazing nano-fantasies, living vicariously through celebrities in our pharma cubicles.

Maybe there’s a new frontier in there somewhere but I’m having a hard time seeing it.

But hey! let me conclude this rant with a hat-tip to the man–he happens to be a Canadian–who best eulogized the essence of that once-and-future great North American work zeitgeist, which seems to be disappearing into the dustbowl of history, because it looks like  there’s nowhere left to go.

  https://www.youtube.com/watch?v=NjoU1Qkeizs

Well, maybe there is somewhere.

https://www.youtube.com/watch?v=38bHXC8drHc

Glass half-Full

The Unseen Hand of Capitalism, 21st-century version

January 6, 2016

I’m a regular guy who is trying to learn a thing or two about how things work and what makes the world go around and so forth and so on.

Back in the day, early 1970s, I was a clueless college student trying to figure things out. My draft # was 349, so I didn’t have to go to Nam. I know some who did have to go, and I appreciate their service to our nation.

So there I was at LSU in 1970, an English major, clueless about the world and everything in it. (I thank the Lord that my children have made better decisions than I did in their early life choices.) One good thing about being an English major is that you do learn how to read and write well, and that helps a lot as we go through life. To this day, I do not regret learning to read and write copiously.

Well, the years rolled by and I got along all right, with much help from God and my wife, and some dear friends with whom we raised our young’uns. I did sales for awhile, then drifted into construction and stayed on that path for most of the working life. We managed to get the three youn’uns through college and out on their own and that was a great blessing.

Fortunately, I never had to lean heavily on that classic phrase of underemployed English majors, Would you like fries with that?

Long about 2004 or so I decided to ease out of construction work; my wife was doing well in her nursing career. The kids were pretty much on their own. I took a few education classes at the nearby hometown university, and was moving toward some new destiny which we knew not what it would be.

By ‘n by, along came the fall of 2008, and the Crash of 2008 on wall street and so forth and so on. You know the story.

And since I had been, back in the good ole carefree college days, an English major, I was still in the habit of reading and writing. Therefore and henceforth  I started reading copiously about the financial developments that were so profoundly altering everybody’s life, even still yet today, as we speak.

And it seemed to me that the whole economy had kind of gone crazy there for a while, for a few weeks or a few months, as we’re seeing in the Big Short.  But then things sort of evened out a bit, but they never got back to what they were before and furthermore they still haven’t, even though the unemployment rate has dropped down from ~10% in 2009 to the ~5% it is today, according to the BLS or the BS, or some such number-crunchin agency in Washington maybe next to the Brookings or over on K Street or some important think-tank place like that.

Long about that time, early ’09 or somewhere in there, all the doomsayers showed up online and everybody and their brother was saying the whole dam world would come apart at the seams again and u better buy gold and it seemed to me like this Crash might do a replay but it never did. Instead, things just kind of got on a long, slightly upward slope to what we have today, whatever it is, somewhere between recession and high cotton, with  chronic destagulation and perpetual consternation but no real catastrophe like those fringy preppers (not preppies) had said back in ’09 or ’10 or whenever that was.

In my clueless English major kind of way, I was keeping an eye on the stock market, just for fun of course because I didn’t know much about it, but I must say I was amazed that we never really had another big crash like we had had in ’08.

Every time the numbers would take a big turn down, and you’d hear about the market being down a hundred or two hundred, especially in September or October, you’ d think this could be the Big one again.

But it never was the big one again. It’s been pretty much steady-state destagulation with a few ups and downs here and there– no inverted hockey-stick graphs.

By ‘n by, as the weeks rolled by and as I was wondering about all this, I began to wondering if there wasn’t some force or entity that was acting in a big, manipulative and perhaps surreptitious way on behalf of ?whoever ?whatever, the good of mankind, to make the market stay steady instead of taking another dive. It kind of seemed like it. Whoever or whatever it was or is must be pretty daggone powerful or influential. Maybe some Julius Pierpoint Morgan (the original WallStreet bailout artist financier) who was just intervening, out of some sacred duty that had been laid upon him as a knight of the financial garter, on behalf of the whole Western world to keep everything on a relatively even keel so we wouldn’t have another Panic of ’07 or ’29 or 2008.

T’was then I thought about that famous phrase: the Invisible Hand, as applied to economics. There’s got to be an Invisible Hand in there somewhere stopping that WallStreet slide every time one starts.

Wikipedia https://en.wikipedia.org/wiki/Invisible_hand explained to me that Adam Smith had introduced the concept in economics in the year 1759. The Invisible Hand the idea that the  multiple economic actions of individuals who are acting independently of each other manage to, by luck or Providence or some unseen beneficent force of the Universe, produce a composite outcome that is beneficial to the whole Market, and maybe the whole world.

So as I became more and more astute in these financial matters, I began to feel, somewhat intuitively or through keen powers of in cumulatively clueless observation that this invisible hand was not some ethereal beneficent presence, but rather, a definite entity in the real world. Something very real. Somebody’s doing this! Come on now, who is it?

And now, thanks to Ben Bernanke and his memoir, Courage to Act,

http://www.amazon.com/The-Courage-Act-Memoir-Aftermath-ebook/dp/B00TIZFP0I

I have been duly informed. My days of financial naiveté are over, and I see the world for what it really is.

It was the Fed all along!

If you read the epilogue of Ben’s book, you’ll see what I mean. Here are just a  few favorable developments during that period, the last seven years, that he mentions:

~ Unemployment rate, from Aug 2012 at 8.15 down to 5.7 in Oct 2014, during QE3

~ 3 million jobs added in 2014, the largest annual increase since 1999

~ 10.7 million jobs added from 2010-2014

~ “The Fed’s securities purchases and lending programs turned a large profit for the government. . .sent almost $100 billion to the Treasury in 2014”

~ “Households had reduced their debt, their interest payments were low, and the value of their homes was higher, as was the value of most retirement accounts.”

~ “Consumer confidence, as measured by surveys, had rebounded.”

~ “At the end of 2014, U.S. output was more than 8 percent higher than at the end of 2007, the pre-crisis peak.”

So it’s plain to see that the Invisible Hand has been absolutely vigilant and effective. But this previously mysterious entity is no longer simply the composite whole enchilada of Capitalism. It is . . .

The Federal Reserve!

Thank you, Uncle Ben and Aunt Janet.

Times have changed, and so. . . has Capitalism. The old days are gone forever. We are now living in a bored new world of managed economy.

Glass Chimera

From Black Friday to Derivatives Saturday

November 28, 2015

Back in the crash of ’08, clueless underlings such as myself suddenly were made aware of a mysterious component of our financial system called “derivatives.”

What is a derivative? you may ask. Funny you should ask. I didn’t know either, and I still don’t. Although I have been trying to figure it out for seven years now, every time I think I know what a derivative is, I encounter acronymic terminology such as MBS, CDO, or SEC.

These slimmed-down nomenclatures should simplify things, but they do, in fact simplify nothing. Although everybody knows SEC stands for Southeastern Conference, which is the football conference where the best American football is played, and where my alma mater LSU exercises its right to excel in athletics, except when teams like Alabama or Florida are on the field.

Tyger

But I digress. I was explaining to you what a derivative is and I mentioned some of the simplifying terminology.

For instance, as alluded to above: MBS.

Well some well-positioned bloggists of the worldwideweb identify an MBS as a Masters of Bullsh*t, which is attained through much blood sweat and tears and dedicated gamesmanship acquired at a venerable institution, such as Barnwell University or Cayman College. The MBS is attained through years and years of shoveling potentially useful data into HFT, which produces a yield from which its index is derived,  and lucrative assets which are then deposited into accounts on behalf of the bullish denizens of WallStreet. These rich deposits build up the notional value of our economy as a hole, thus enriching all of us, not only those who are forever horsing around on Wall Street, but also  you and me and all the folks on Main Street, Easy Street and Ventnor Avenue.

Somebody has to do it. I don’t mind doing my part, working with a shovel. Keeps me in shape.

Anyway, that’s not the MBS of which I spake. I’m talking about Mortgage Backed Securities. I think Uncle Freddie Mac and Aunt Fannie Mae gave these instruments as gifts back during the holidays of 2007, when life was oh simple then, before time had rewritten every line.

My understanding of a Mortgage Backed Security is that they’re something like an Arkansas RazorBack, which is probably why they didn’t work out so well for investors, although Arkansas is ranked third in the SEC west, behind Florida and–excuse my language–Ole Miss.

After that is my LSU Tigers, presently in fourth place of SEC west, but as always and forever will be, bound for greatness.

It’s quite complex to describe just how LSU could be in fourth place, because its position in the rankings is derived from the ratio of victories to losses, divided by the number of footballs passed beneath the legs of a center when he hikes the ball to the quarterback during any given play of the game.

Nevertheless, as I was saying before, a derivative is derived from the outcome, that is to say the, rear-end of a complex financial instrument.

Now I’m sure you’re wondering, as any serious investor is wondering, about the real question here, which is: how much is it worth?

One thing that my research has revealed, and one thing I can tell you with surety is this: The value of any particular derivative is derived from fluctuations in the value of the underlying asset.

Here’s an example: how much is my ticket to this season’s Sugar Bowl worth? Well, at this point it’s an open question, but let’s just say this: I’ll give you my ticket to the Sugar Bowl for your two tickets to the Orange Bowl.

Meanwhile, back at the ranch (Texas Aggies be forewarned), the guys who are shoveling out in the barn are asking what’s the real value of these derivatives. And as I explained before, you remember that the value of any particular derivative is derived from fluctuations in the value of the underlying ass-set. That should come out plain enough.

As for the collective value of all the derivatives, this figure is derived from its notional value, which is calculated based on the notion, as defined by the US Treasury, the Fed, the NYSE, and the AP sportswriters, that whatever goes around comes around, so therefore if the value of the aforesaid derivatives passes through enough piles of assets then when it comes out the other end nobody really knows what its worth, so that it can be revalued at the going rate.

This is unpredictable, of course, as the LTCM affair had indicated  back in the Glass-Steagall days, but it is bound to be worth, somehow somewhere when you least expect it, more than it was in January of 2009. So that’s progress, although the Progressives may not agree with me. I don’t pay much attention to all those freaks on the fringe anyway.

And you understand, of course, that all this has taken place after Cronkite passed from the scene.  Before that, it was pretty much everybody working together in America toward the same values and goals. But that was then and this is now. Derivatives happens.

I’m glad I could clear this up for you. As for the Sugar Bowl and the Orange Bowl,  may the best team win, as it frequently does, but sometimes not.

 

Glass Chimera