Re: Re: Re: Re: Re: US Consumer Confidence index surges

[Rob Schaap <bantam@xxxxxxxxxxxxxxxx>]

G'day Doug,


Doug Henwood wrote:

> No more tiring than it gets to see leftists making the same point
> over and over again. It's stunning how this list comes alive at a
> hint of panic. Michael wants PEN-L to be relevant to political
> activists, but disaster-sniffing doesn't seem to be the way to go
> about it.

Well, the satisfaction of seeing the theory of efficient markets take a world
thoroughly dependent on the psychology of a thriving stock-market (rather
than, say, a bank-regulated system or rational analysis of     *global*
'fundamentals' [as opposed to seeing billion-dollar significance in a bit of
end-of-quarter jockeying and one mildly upbeat report of the expectations of
the world's most insular and complacently credit-dependent consumers]) deep
into a depression would be less than a pyrrhic victory, as we all have the
imagination, I think, to know what the word 'depression' really means.  It
means we, or people we know, lose everything, it can mean our kids lose their
chance at a good education and a relatively healthy social milieu in which to
develop, and it can even mean some of us starve.  And it can mean the worst
thing there is: war.  So the argument that conditions pertain which render the
whole world susceptible to depression does not really a fond wish make.

> Look, for much of the world, "disaster" is the norm. That hasn't
> worked to the left's advantage in too many places, at least not yet.

Quite right.  My first response to hearing of economic disaster somewhere (eg
Russia, Indonesia, Turkey, and now I think we can add the likes of Brazil and
Argentina) is to look for signs of looming right-wing demagogues - they're the
ones with the form on the board in such situations, after all.

> For the more comfortable part of the world, disaster has rarely
> worked to the left's advantage either. In the light of that, there's
> something pathological and self-marginalizing about getting excited
> when the Dow loses 300 points - or dredging up a sucker rally from
> 1930 as a precedent on a day when it's up 200.

I'm with Jim on this - but I don't think we can lose sight of the media- and
pollie-induced social-psychology of Wall St.  Nor of Jim's bears.  Nor of the
new, fragile, and outa control relations that connect a floundering core to
the rest of the world.  Nor of Minsky's notes (I mention him because I know
you have a lot of time for the bloke) about how a looming crunch would look as
it was coming about.  I mean, considering how many people have been calling
this a bubble, credit (consumer credit, spec credit and take-over/buy-out
credit) has been awfully easy to get on the basis of bubble values, eh?

And if the tech sector is leading the rally, it must be a sucker rally, no?  I
mean, semiconductors are leading a rally in a moment where world buying power
is stretched to the limit and the computer-demand curve is flattening out
dramatically, aren't they?  Excess capacity, consequently low profit
projections, yet also apparent global underconsumption.  If that's right,
ain't that a daft scenario in which to allocate portfolio chunks to the
sector?  I reckon a 'rally' thusly based, is a rally with a very imminent
use-by date, anyway ...

>Or with an alleged progressive wishing mass impoverishment on the
>American working class.

We're saying the system is relatively autonomous , structurally volatile, and,
I think, close to landing the US economy with a serious bad debt situation.  A
daft way to run a world - both as resource allocation and people protection,
and one that'll cream us one day or other.  One job appropriate to economists
is, I'd've thought to identify indicators that a damaging spasm is a foot.
Jim's bears do it for me (it's hard to ignore a half-trillion-dollar CAD with
conviction, for a start).  So does any peek at the history books.  If the
railways induced the growing importance and autonomy of stock markets, the
same sorta new-world technoboosting blue-sky rhetoric we've been hearing,
produced an associated boom, testosteronic merger frenzies, and then a killing
slump, that'd be relevant.  If it happened again when electricity and the
automobile came along, well, that'd be important data indeed, eh?

And if, as now, banks begin to turn down the commercial credit taps; and if,
as now, US  baby-boomer pension-investors have to cut consumption because
their eggs have fallen out of the NASDAQ basket and they only have five years
to prepare for their suddenly-not-so-golden years; and if, as now, to lower
the greenback is to risk closing the tap on the foreign moolah that keeps
values up enough to back the credit already out there; and if, as now, the
only economies capable of taking over as the world's buyer of last resort
(Europe and Japan) obviously can't take that on; and if, as now, the usual
solutions (interest-rate cuts and tax cuts for the rich) have come only after
real investment has about-faced, discomfiting suspicions have formed in a
billion heads, oil prices have hit heavy manufacture, and the housing market
has turned - well, you'd be justified in suspecting there may be a link
between Wall St and the world economy insofar as raising the question, how low
may stocks fall before the US loses its foreign drip-feed and
residential/corporate leverage becomes exposed sufficiently for defaults and
rolling credit crunches to add their deflationary might to the mix, doncha reckon?

> The hell with it. I'll shut up for a long while.

Hope you don't, Doug.  But you don't really tell the likes of my morbid self
why exactly we shouldn't be worried, and why we shouldn't be croos with all
that market deregulation of the last twenty years, and why we shouldn't wonder
if we might not have a real problem with excess capacity and underconsumption
(eg. semiconductors and auto in both the capital goods and consumer sectors),
and why Reserve Bankers might not be stuck with very little room for manouvre
in the area of interest rates and currency values.

I mean, are my facts wrong, or (even more likely) are my analytical linkages off-base?

Cheers,
Rob.