Dear Diary,
“Has anyone seen my charger?” was probably the most common question heard in the Bonner household this Christmas.
Everyone has an electronic communication device of some sort. Every device has a charger. And at any given moment its owner can’t find it.
iPhones and chargers all look alike. If you are in a house full of young people, and you are slightly retarded, the one in your pocket probably belongs to someone else.
That leaves the poor owner disconnected from what he believes is the real world – the world of Facebook, Twitter, Spotify and Instagram.
Cut off, he soon goes into a kind of catatonic withdrawal – like a dead Christian mistakenly assigned to the Devil – and cries out in indignation, desperation and pain:
“Who took my phone?”
Thus prompted, your editor pulls the phone out of his pocket and tries his passcode on it. It doesn’t work. So, he replies: “I can’t find my phone either.”
The Age of Miracles
Christmas has changed since the days of Scrooge and Cratchit. Even at the dinner table, you are likely to find someone checking the latest sports score or stock price.
As to the stock price, he needn’t bother. There was nothing much going on in the markets. Traders, investors and speculators are enjoying a midwinter holiday.
They’re also enjoying a spate of good news. As Chris reported yesterday, the latest revision to the third-quarter GDP growth number reveals the US economy growing at a 5% annual rate, with much of the boost coming from consumer spending.
Could that be correct?
Sure. This is the Age of Miracles. People are ready to believe anything.
Besides, it must be true. The Commerce Department calculated it. And the New York Times reports:
The American economy grew last quarter at its fastest rate in over a decade, providing the strongest evidence to date that the recovery is finally gaining sustained power more than five years after it began.
Bolstered by robust spending among consumers and businesses alike, economic output rose at an annual rate of 5% during the summer months, the Commerce Department said Tuesday, a sharp revision from its earlier estimate of 3.9%.
The advance followed a second quarter where growth reached a rate of 4.6% after a decline last winter that was exacerbated by particularly harsh weather.
The revision was led by an upswing in investment by businesses, a powerful force for growth in most economic recoveries but one that has lagged in the latest rebound.
Higher consumer spending, including increased outlays on health care, and a narrower trade balance also contributed to the summer improvement. The gain makes the third quarter the strongest since the summer of 2003.
Things are looking up.
And if they keep looking up like this, we may have to revise our Weltanschauung… or at least that part of it where we think the economy is going to hell in a handcart.
On the evidence, it’s not going to hell at all. It’s going to heaven… without even dying.
Ready to Believe Anything
Nietzsche remarked that there were those who believe nothing and those who are ready to believe anything. There is a time and place for everyone… and this is clearly a time for the latter group.
But wait. There’s more…
Real personal disposable income is up. Unemployment is down. The lower oil price is putting more than $100 billion of spending power in US consumers’ hands. And now we can see Seth Rogen’s movie The Interview without risking assassination in a crowded movie theater.
We watched the movie over the weekend, after we found the appropriate charger.
It was so forgettable that we have already forgotten what it was about. But it seemed less and less likely, as the plot unfolded, that the North Koreans would get hot about it. There just wasn’t much to get hot about.
Also, it included a familiar, and annoying, line that showed the writers know no more about money than investors do.
When he is finally given the opportunity to interview North Korea’s top man, our hero asks:
“Why don’t you feed your people?”
The same question could be asked of any leader anywhere on Earth. No matter whom you put it to, it is equally absurd. No leader feeds his people, no matter what his politics.
Farmers feed people. Restaurants feed people. Grocery stores feed people. Mothers feed their children. Charities feed the poor. But political leaders are always and everywhere parasites who are fed by the real food producers.
A more intelligent question would have been:
“Why don’t you allow the food producers to feed your people?”
But we are just picking nits. And why bother?
Wonders are all around us, each one more wondrous than the last. Politicians feed their people. Central bankers rescue and rehab their economics. Stocks are more valuable.
And we get gluten-free wafers at church. What more could we ask for?
Where’s our charger?
Regards,
Bill
Will Greece Trigger a New Euro Crisis?
The US economy may be growing at a 5% clip… but the rest of the world is not.
And that could prove its undoing…
This was the view expressed by former PIMCO CEO Mohamed El-Erian. Writing for Bloomberg, El-Erian warned that the risks to future US economic growth are what economists call “external and exogenous”:
With the US growth drivers developing deeper and wider roots, the main impediments to economic “liftoff” are now concentrated in two areas.
First is the weak growth in the rest of the world – conditions worsened by the geopolitical shocks from Russia.
Second is the possibility of either a market accident – because investors have become overly reliant on the Fed’s prolonged loose policies – or a dislocation arising from a policy mistake – because central banks have been carrying too much of the burden for too long.
El-Erian didn’t mention Greece. But recent news out of the cradle of civilization, and epicenter of global debt, isn’t good.
Yesterday, Greek prime minister Antonis Samaras, of the pro-bailout New Democracy Party, failed to muster enough votes to get his candidate elected president.
The role of president isn’t an important one… except in one regard. The failure for the government to get a president elected on three ballots requires the sitting government to dissolve itself and call general elections.
That means parliamentary elections next month.
And it means neo-Marxist Alexis Tsipras – who has threatened to tear up the current €240 ($292 billion) bailout agreement with the European Union, the European Central Bank and the IMF – is the man most likely to become Greece’s new prime minister.
His Syriza coalition leads the polls by a 3% margin.
Yesterday, the Athens Stock Exchange plunged to a session low of 10% on the news of the failed presidential vote. And the yield on Greece’s 10-year sovereign bonds – which moves in the opposite direction of prices – shot up by more than one percentage point to 9.4%.
Investors know that a victory by Tsipras in a national election will set Greece on a collision course with Germany and Greece’s creditors… and potentially trigger a renewal of the euro-zone crisis.
Can the US economy weather this kind of “exogenous” shock?
We may be about to find out…