Cyreenik Says

August 2017 issues

Charlottesville: icon of a moral panic

Yet another 2017 surprise: the start of a moral panic. In August there was a political rally in Charlottesville, Va to protest the removal of a Robert E. Lee statue from a city park. It would have been just another political demonstration except there was a vigorous counter rally and then a high-profile capper: a terrorist drove a car through the demonstrators, injuring many and killing one. Still not much of a terrorist act compared to others taking place around the world in 2017, but this one has become the icon for a moral panic that is growing in the US.

This panic centers on racism and Confederate leader statues in public parks around the US. As a result of the panic many are getting taken down. How widespread this panic becomes and how it evolves are still to be seen. But having the panic is yet another surprise of 2017.

Trump Bump and Eclipse Dip

2017 has been a year full of surprises. Here is another one that I'm calling: an Eclipse Dip on the stock market.

The enthusiasm for watching the solar eclipse coming to America on August 21st has been large and growing over the last month. There are now big crowds and massive traffic activity in many of the areas where totality will happen.

Up until now this has just been a curiosity for me. I have experienced an eclipse before so this is not particularly special for me.

Then the "Ah-Hah!": This is a form of End Of World (EOW) thinking in action. It is mild, in the sense that it isn't scary, but it is full strength, as the widespread urge to travel to see it indicates.

If this is an EOW event then there is a second low profile part that is taking place as well: There is an investing mania going on. This second part can have a much wider impact than the EOW event itself. The investing mania part consists of people getting excited and in their excitement taking on riskier investments than they normally do in sober times, and these investments don't work out well so there is a business crash and recession following the EOW event.

The place where this happens routinely is when a city invests in hosting an Olympic Games or World Cup event -- first there is lots of excitement and lots of local investing. The event then comes and goes, and it is followed by lots of local enterprises getting burned when the excitement wears off without having produced the bump in business these people were expecting. In the case of the games hosting the bust is small, just region-wide.

This thinking style also happens on a bigger scale about every decade, or so, triggered by a more random event. Two examples of being much bigger in scale are the 1997 Hong Kong Turnover leading to the 1998 Asian Flu Bubble bursting, and the year 1999 Y2K mania leading to the 2000 DotCom Bubble bursting.

So, will we have an Eclipse Dip? I'm calling it, but I think it will be the small and short-lived sort, comparable to an Olympics games bust.

But, then again, the world is full of surprises, and 2017 has been an especially surprising year.

Update: Whether the Eclipse Dip comes to pass, or not, there is a much more tangible EOW event brewing: Brexit. This is coming in 2019 but what the form will take is still being negotiated and the negotiations are filled with uncertainty. I'm calling a quiet Brexit mania leading up to 2019 and a slump comparable to Asian Flu or DotCom Bust following it.

Update: As of 6 Sep 17: no dip. Instead the market capped August and started September with a nice rise. Lesson learned: if an EOW event doesn't have any business involvement, it won't affect business markets. This still leaves the Brexit event to have a big impact.

Is complacency growing in America?

America's Big Challenge for the 2020's: figuring out how to move around again

One of the keys to growing a community's prosperity is being willing to change. One of the symptomatic changes is changing where one lives. The largest scale example of this is America being an immigrant nation. This is at the heart of American Exceptionalism.

But things keep changing. And one of the changes facing America in the 2010's is that, even with the widespread adoption of the internet and smartphones, change is slowing down. One important symptom of this slowing down is American mobility -- Americans aren't moving around as much as they used to. Along with other changes this means Americans aren't finding new, world-shaking and well-paying jobs like they were doing in the 2nd half of the 20th century. And this means prosperity isn't growing like it did then, either -- moving people to jobs, and jobs to people -- both are part of this beneficial change... when it happens.

Getting this change back into high gear in America is a big challenge and a vital one: This is the key to making America great again. Again, getting change back into high gear is The Big One for the 2020's. Whichever communities do this the best will get the "Exceptionalism" award for the mid-21st century.

This thought was inspired by reading a lengthy 2 Aug 17 WSJ article, Struggling Americans Once Sought Greener Pastures—Now They’re Stuck The country is the least mobile since after World War II, even in economically depressed rural locales by Janet Adamy and Paul Overberg, which describes in great detail this change in American mobility.

From the article, "What is troubling about this rural town and many places like it is that while lots of struggling residents see leaving as the best way to improve their lives, a surprising share remain stuck in place. For a number of reasons—both economic and cultural—they no longer believe they can leave."

And here is a related 2 Aug 17 WSJ article, We Survived Spreadsheets, and We’ll Survive AI History shows technology fuels new kinds of jobs in addition to the ones it renders obsolete by Greg Ip.

From the article, "Back in the 1860s, the British economist William Stanley Jevons noticed that when more-efficient steam engines reduced the coal needed to generate power, steam power became more widespread and coal consumption rose. More recently, a Massachusetts Institute of Technology-led study found that as semiconductor manufacturers squeezed more computing power out of each unit of silicon, the demand for computing power shot up, and silicon consumption rose.

The “Jevons paradox” is true of information-based inputs, not just materials like coal and silicon. Until the 1980s, manipulating large quantities of data—for example, calculating how higher interest rates changed a company’s future profits—was time-consuming and error-prone. Then along came personal computers and spreadsheet programs VisiCalc in 1979, Lotus 1-2-3 in 1983 and Microsoft Excel a few years later. Suddenly, you could change one number—say, this year’s rent—and instantly recalculate costs, revenues and profits years into the future. This simplified routine bookkeeping while making many tasks possible, such as modeling alternate scenarios."

And a related 3 Aug 17 article in The Economist, Rise of the rent-seeker Unproductive entrepreneurship is increasingly common in America The Trump administration is unlikely to reverse the trend, talks about how regulations are making change more difficult.

From the article, "What explains this shift? One factor appears to be the success of various professional groups in convincing the government to tailor regulation to their needs, for instance by lobbying for occupational licensing. Jason Furman, then the chair of the Council of Economic Advisors, observed in 2015 that the share of the American workforce covered by state licensing laws grew from less than 5% in the 1950s to 25% by 2008, arguing that this deterred new competition."



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