Friday, February 8, 2013

Lie to Me, Please ?

I took a week off from blogging so I could step back and gain some perspective on this lurching catastrophe known as the global economy, swaying back and forth under the overwhelming weight of its own stagnant excess; all while global bureaucrats scurry hither and amok down the crack of the ass of their elephantine monstrosity, doing whatever it is that they do. So while we wait for this illusion-formerly-known-as-the-economy to come to its inevitable sudden and unexpected heart attack, amid the stifled screams of esteemed economists watching as their retirement plans are refactored down to numbers of bags of dog food, I stumbled across another overwhelmingly pathetic attempt by the Idiocracy to magically repackage bad news into good news:

"Stocks Up...Best Close For the Nasdaq Since 2000" !  

This really got my attention; I had to see what all the excitement was about, since the younger me still has a lot of money buried somewhere atop the Nasdaq circa 2000...

"This is Fucking Awesome"
It only took 13 years and $8 trillion of combined fiscal/monetary stimulus to regain 50% of the Nasdaq's all time high !  At this rate, only another 13 years and $8 trillion until I break-even...

The "Tech Echo Bubble" And The World Ponzi Economy
The 1990s technology boom/bust and now the subsequent past ten years' "tech echo bubble" are instructive for what is taking place in the world economy. Old Tech - Microsoft, Intel, Dell and Cisco are dying. They won't reinvent themselves because they won't self-cannibalize their own unsustainable profit margins, so they just mark time while other companies invent cheaper alternatives and take away market share.

"New Tech" - Apple, Google, Amazon and Facebook, meanwhile are merely an incremental improvement over "Old Tech".  These new companies make their money by taking market share from Old Tech, and by killing off traditional retail, advertising and media businesses. Old Tech clearly has parallels with the developed nations which are all still clinging to unsustainable business models, while the developing countries take more and more market share. New Tech are the upstart developing countries taking market share from the developed nations. In other words, New Tech is not creating overall economic growth, it's just cannibalizing existing business models. Similarly, the developing nations are not growing the world economy by creating their own middle class, they are merely liquidating ours.

The Two Key Themes Of Our Era, That Never Get Discussed
So in my time off, I came to realize that there really are only two overriding economic themes that define this current era, and until these are confronted and addressed, everything else the buffoons in leadership do is just wasting time and resources. One is the theme of this blog, and what I described above - when other countries sought to achieve a higher standard of living, then the clock started ticking on our consumption oriented lifestyle. We now compete globally for the same resources with everyone else on the planet and our middle class labour pool now goes head to head, with the least paid and hardest working people on the planet. All of the various macro-economic interventions of our time have only temporarily forestalled an inevitable equalization in living standards, by no means preventing it.

Secondly, and more importantly, in the 237 year history of the United States, this is the first and only generation that has taken more than it gave back. Every other generation created a surplus in wealth, in growth, in improved standards of living, in R&D etc. - except this one. The past thirty plus years has merely been about consuming what other generations had created; and via Central Bank sponsored cheap debt, consuming the next several generations' wealth as well.

A Deadly Vice
The U.S. and other developed nations are therefore caught in the wholly untenable situation of wanting far more than prior generations ever had, but at the same time facing far greater foreign competition. It's a deadly vise exerting a death grip on the U.S. economy. Therefore the above headline is only one example of the relentless stream of pathetic "feel good" propaganda, exposing the fact that Extend and Pretend is no more than a bogus charade propagated by and for comfort seeking old men and their legions of followers, all of whom have gone soft in the head and soft in the middle. Because until policy-makers wrap their heads around the two overriding themes elucidated above, we have no reason to expect that the vector across all key dimensions, won't be down.