Monday, July 26, 2004

Special Economics And Financial Doom issue

Aug 11- added more quotes. More to come.

Guardian interview with Quantum fund co-founder (with George Soros) Jim Rogers -
The American dollar is a flawed currency and will collapse in value before the end of the decade, taking with it the prosperity of the American nation. Investors should be buying commodities - platinum, lead, wheat, sugar, oil, the sort of assets that haven't been fashionable for a quarter of a century or more. While you're at it, teach your children to speak Mandarin, the coming language of the 21st century. And don't encourage them to do an MBA: Tell them to be a farmer and do a real job.

The irreplaceable, intractable, irascible, irredeemable Mogambo Guru, without whose voice(s) the literary economic world would be a much calmer and duller place -
...for every dude and dudette in the country that has a non-farm job, all 131 million of us swinging our Roy Rogers lunchboxes on our way to work where we slave all day at a job we hate, surrounded by morons, working for chump change, and I can't even leave my lunch in the refrigerator like everyone else because they put stuff in my sandwich when I am not looking, this increase in debt [in a single year] comes to $20,865 each. Each! This is just the damn increase!
What to do? What to do? I suggest that we all run around screaming how the sky is falling, and how we should all be loading up with large-caliber weapons and running for our lives because we are all doomed, doomed, doomed, as that is what I typically do. But Mr. Buckler [Bill Buckler of The Privateer newsletter] has also looked at things, as I have, and has concluded, as I have, that there is nothing that CAN be done, except running around screaming that the sky is falling and that we are all, as I alluded to earlier, doomed, doomed, doomed. As I am too busy wailing and cramming boxes of ammunition into a backpack to continue right now, I will leave it to the clever Mr. Buckley to come up with a simile to beautifully sum it all up. Rising to the challenge, he writes, "There is no 'solution' to this dilemma, just as there is no 'solution' for a man who finds himself in a barrel on the lip of Niagara Falls."

Pimco bond guru Bill Gross agrees, after a fashion -
...bad things can happen in a levered economy. Think of two garages - one with two cars and an immaculately swept floor and the other filled with boxes, newspapers, paint cans and numerous oily rags. Which one do you think has the better chance of going up in flames if a [geopolitical or policy] match or a faulty electrical wire creates Fahrenheit 451? That is an apt metaphor in economic terms when comparing a healthy non-debt ladened economy to one thriving on the creation of paper and artificially low interest rates.

...everything is as it should be. The Asians produce, we consume. The Asians save, we spend. The Asians export, we import. The Asians lend, we borrow.

'This symbiotic relationship has gone on for a long time,' wrote an inquiring Daily Reckoning sufferer. 'Why would it have to come to an end now?'

...U.S consumers have become like a giant leech, sucking up 80% of the world's savings. At some point, we keep warning, the foreigners are going to want to dump on a little salt to get rid of us.

and, veering off toward miscellany...

The Oldman passes judgement upon press coverage of the housing bubble, and finds it wanting.

Brad DeLong summarizes the current U.S. economic state:
It is hard to stress enough the extraordinary contrast in this business cycle between the (lousy) labor market situation and the (good) output growth situation and the (fantastic) productivity growth situation.

from BDL comments -
"Don't worry, your money has not been destroyed. It is only owned by somebody else."

Via Andrew Tobias -
"In finance, decay is more colorful than probity, and the prevailing direction of change in the past generation has only enriched the content of the narrative."

-- James Grant, Money Of The Mind

PQuincy in BDL comments -
perhaps we need to get used to the idea that we can't stay _much_ richer than everyone else forever. And since the overall wealth of the planet is not increasing all that fast, the most likely way we will stop being much richer is not that everyone else will catch up to us (the free trader's model), but that average prosperity in the US will decline.

It may not feel good, but it's hard to argue that this is entirely unfair. Nor does this mean that the average US consumer will be impoverished: but not as many will be able to keep affording big houses and 3 cars and so forth.

Daily Reckoning soundbites -
Apparently, we Americans are not buying quite as many things we don't need with the money we don't have.
Unlike business, which borrows to increase capital investment and employment, nearly every penny a consumer borrows is thrown away; he buys a hot tub for his back yard and ends up poorer and more vulnerable than before.

A veritable plethora of doom-mongering is on offer at Fiend's SuperBear Page.

moving right along, into utter irrelevance -
Armchair analysis of the economies of Middle Earth -
Lord of the Rings...[hobbits'] economic essentially an idealised pastoralism, the middle ages minus disease and famine.

I'll concede though that the economic life of the elves is a mystery. They seem to spend most of their time poncing (sic) around in forests without any visible means of support. Perhaps as the immortal elder children they were all given substantial annuities before going to Middle Earth. Which raises an interesting issue, how do you value an annuity for an immortal being with an average existence of at least 10,000 years?

if you're not recognized as a genius when your work comes out, be patient: (via)
Dr. Tolkien has little skill at narrative and no instinct for literary form. ... Now, how is it that these long-winded volumes of what looks to this reviewer like balderdash have elicited such [glowing] tributes...? The answer is, I believe, that certain people - especially, perhaps, in Britain - have a lifelong appetite for juvenile trash.

John Holbo in here -
Tolkien is so true to himself that he simply can't be untrue to anyone or anything else.

No comments: