No Ordinary Time:

I recently read Doris Kearn Goodwin’s excellent tome “No Ordinary Time” the story of  the Roosevelt’s  War Years (1940 to 1944) in the White House. Lots of interesting stuff, particularly relating to the role of Elinor, as First Lady.  The title words are taken from Elinor’s acceptance speech to the Democratic Convention on behalf of her husband for a third term as president. Who says there has never been a female president? 

 A large part of the message contained in the book is that, in those times, people were actually listening to what their leaders were saying. Or perhaps it was that they had the time and the inclination to listen. 

FDR invented the idea of the Fireside Chat to be carried over the radio,  as a time for  him to make the case to the public at large for the policy he was proposing in the legislature branches of government. No doubt the President was a super salesman, in that he was able to convince a  skeptical public to rearm (thus saving the country from the Great Depression) and come to the aid of England then struggling in the Battle for Britain. But he also had something else going for him namely exclusivity. Radio was the only game in town. 

Compare this to the jibber jabber we have today; the one thousand channel universe, Google, facebook, twitter and yes the all important “trending”.  Is anybody listening? .  Does anybody care?

The technology of me now,  has taken over and is racing away with the future, creating a new elite and leaving the old behind, mumbling about the unfairness of it all. To wit  uber , airbandb,amazon  and iphone. It is as if the old elite are running to catch a train that has already left the station.

Political campaigns are now fought  in sound bites and the social media, as is the battle for fleeting  public adoration. A hero or a goat, it all takes about the same amount of time.  Live and in color on the iphone , in all its glory and brutality, is now the norm.

Perhaps it is because there is no time; everyone is too busy multi tasking. When F.D.R. broadcast his fire  side chats he was talking to stay at home Mums and working Dads. Now he would likely be talking to a tablet owned by a executive Mum or maybe a stay at home Dad, who drives for uber, looks after the kids, and manages the family home as an air B&B.

What this leaves me to wonder is do we still have the tools to build social cohesion should the need arise. So far the evidence is  unclear; maybe with the assistance of the new here and now generation we will grow into this strange new world. 

 

The China Syndrome:

What an incredible spectacle. The world financial system apparently teetering on the abyss over the failure of China to live up to the economic expectations of the pundits; and all this during the dog days of summer when not much is supposed to be happening. 

Watching the stock markets collapsing around the globe, a spectator might be excused for asking who is in charge? Or has it really come down to an interconnected world where one spark can ignite the whole shebang.?  The answer depends on who you ask. 

The traders employed by the bankers will tell us that indeed it is an interconnected world where trillions of dollars in derivatives are sloshing around waiting for the hair-trigger fingers of algorithms designed by quants. This is the scary world that few understand even though it accounts for the majority of trading volume on the worlds exchanges.

A more rational explanation might be  that asset values (stocks) driven up by years of zero interest rates (easy money) were just looking for a return path to sanity. All that was needed was the excuse, that in this case, happened to be China.

I have written before about China’s need for continued growth as a way for the Communist Party to control the proletariat. I do not think this has changed. But I suspect that controlling the levers of power is proving to be easier said then done. The very thought of  a tightly controlled  economy with massive State  Owned Enterprises placed along side of rampant capitalism  boggles the mind. There is absolutely no precedent for such a hybrid and consequently it is very difficult to figure out what is going on. I doubt however, if the lofty growth rates thrown about by the Communist elite, bear much resemblance to the Gross Domestic Product numbers used by the rest of the World.

The Baltic Dry Index (a measure of what shippers are prepared to pay for shipping capacity) has been falling for two years, and is now near an all time low. The Commodity Index has also been in free fall leading to the inescapable conclusion that World Trade has been slowing for some time. If it were not for the hysteria over China, this might well be chalked up to more normal  long-term cyclical  patterns.

The flip side of the China Syndrome is why would the likes of India. Brazil and South East Asia not be subject to well established business cycles?  Have the bankers and rulers of these countries unlocked the secret of controlled growth? I think not.

As an old-timer I have to admit I have witnessed at least four commodity cycles and I fail to see the difference this time around. The players may be different but the cause is still the same. Too much cheap money pumped into increasing capacity ahead of the growth in demand.

The volatility of the correction had nothing to do with the planners or     the players and everything to do with technology and good old-fashioned greed.