Cyreenik Says
This 28 Sep 12 WSJ article, Obama Blocks Chinese Firm From Wind-Farm Projects by Damian Paletta, Keith Johnson and Sudeep Reddy, talks about the Obama administration blocking the purchase of a wind farm by Chinese buyers. Why? Because "the wind-farm sites are all within or near restricted air space at the Naval Weapons Systems Training Facility Boardman in Oregon."
Oh my... that's a stretch! Some Chinese business people can't buy a wind farm because as owners they can look at airplanes flying to and from an airport?
...With this incident in mind, I can now sympathize with the "Blame Bush" Democrats: It seems the Obama administration has soaked up a lot of "crazy" from their predecessors.
More seriously, this is a good example of stress creating a blunder. The blunder in this case is protectionism. The Obama administration doesn't want to use the "P"-word, and would create a firestorm if they did, but who can complain if you use the "NS"-words? They are invoking America's National Security Blind Spot to do some protectionist cheap shotting. Politics as usual: poke now, pay later. <sigh>
One of the harsh lessons of the 2010's growth stagnation is that economics is still a soft science. This 8 Sep 12 Economist article, The mystery of Jackson Hole: Central bankers wonder why success eludes them, talks about this harsh reality. From the article, "IMAGINE that the world’s best specialists in a particular disease have convened to study a serious and intractable case. They offer competing diagnoses and treatments. Yet preying on their minds is a discomfiting fact: nothing they have done has worked, and they don’t know why."
This is certainly stressful, and frustrating. It implies that something important is happening, but these experts don't know what it is. This ignorance is important for two reasons: First, if this gets scary as well, it's Blunder time. Second, these people are pushing the markets hard, and they've been pushing them hard for years now. This implies they are distorting the market... but they don't know how. If they did, they'd have fixed the big problem, growth, months ago and stopped pushing so hard.
This means that big, unpleasant surprises are still in store. Something economic is getting bent way out of shape, but we won't know what until it snaps.
Update: This 3 Oct 12 Forbes editorial, Gold can save us from disaster by Steve Forbes, has an explanation of what is getting twisted out of shape. From the article, "What the Fed is doing through its binge buying of bonds is enabling Washington to consume our national wealth. Instead of creating new wealth we are beginning to destroy that which exists. No wonder tens of millions of people feel -- rightly -- that their real incomes are declining and their financial situations are coming under more pressure. In real terms the stock market is lower today than it was in the late 1990s, and even in absolute terms it still isn’t where it was in 2007."
This 18 Sep 12 WSJ Heard on the Street, FedEx Ships Bad News on Trade by Justin Lahart, describes that FedEx is seeing more international trade decline this quarter. From the article, "The company cut its already disappointing earnings guidance for the fiscal year that ends next May. The cause: Recession in Europe, a lackluster U.S. economy and the worsening slowdown in China and other emerging-market economies have led to a stark deceleration in global trade." This 8 Sep 12 Economist article, Boxed In, talks about the same issue.
There are bright spots in the US, the stock market is up and housing seems to be recovering, but this decline in global trade is the elephant in the room. If world trade is down that's a big dark cloud on our economic future.
This means watch for more unpleasant surprises related to poor economics. For instance, the Benghazi embassy trashing is more likely related to poor world trade causing widespread frustration in the Arab world than it is to some random video.
Roger's prediction: expect a steady stream of more frustration-based trouble until this reverses.
The media and political coverage of the Mid East violence that produced the Benghazi embassy killings has been strangely misdirected. This 16 Sep 12 WSJ editorial, The Video Did It, talks about the misdirection in the political arena. From the article "The Obama Administration dispatched Ambassador to the U.N. Susan Rice to the talk shows Sunday to explain the outbreak of anti-American protests in the Arab world. Her message: It's all the fault of that 13-minute anti-Islamic video on YouTube. U.S. policies or foreign terrorists have little or nothing to do with it."
This video was a trigger, and a miserable little one at that. It had about as much relevance to the violence as WMD's did to Bush administration's decision to invade Iraq. But neither the politicians or the mainstream media seem to grasp this.
What should be being investigated and reported on is the "powder keg" -- the existing conditions that let lots of Mid Easterners get behind causing this violence. My guess is that a little digging will show that economic conditions and deep frustration with the current post-Arab Spring lifestyle are what we should really be concerned about, not some crank movie trailer produced by some serial fraudster.
This is an outcome of the Arab Spring revolution as it evolves and changes economic, political and social thinking in the Arab world, and it's not a terribly surprising one.
This 5 Sep 12 Forbes article, Broken California: Wasting Money and Hurting Business by Gary Shapiro, talks more about how California is following the Midwest into making life expensive for business by building up taxes, entitlements, rules and regulations. And the effects are starting show up. But California citizens, like those of Cleveland, Detroit, and Liverpool before them, are paying little attention to the stampede of innovators headed for the exits. Instead of seeing crisis that needs to be corrected in the city bankruptcies of Stockton, Vallejo, Mammoth Lakes and San Bernardino they see the glory of reviving San Francisco and are complacent.
From the article, "California workers might find it harder to find jobs because so many businesses are fleeing the state to find more economic stability. California ranks as the third worst state in the country in terms of job migration with a net outflow of jobs that is one percentage point greater than the flow of jobs into the state. When comparing the ratio of jobs created by new businesses compared to jobs eliminated by firms going under, California ranks 34th."
(See more about the Midwest Disease in my article Thoughts on Cleveland.)
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