Thursday, January 26, 2012
Davos WEF 2012, or, the highest density of ego's per cubic meter!
These days Bloomberg runs a show (aka Surveillance) from Davos in Switzerland, at the back end of the World Economic Forum 2012, or the largest concentration of ego's from the world, with political leaders, academics, business leaders, billionaires and if I had to guess plenty of top quality hookers and shitloads of insanely expensive booze. I mean, with all those fora meetings going on during the day, where else would those good men go to please their ego after-hours ? If you have any alternatives, feel free to post your ideas in the blog comments section.
Anyways, let's get serious for a moment. I just saw Bloomberg's Tom Keene, (who tonight hasn't stop talking about his last night's piano bar experience) interview another big shot from Morgan Stanley Stephen Roach. I don't particularly admire economists, and I enjoyed so much being proven right again about my feelings by hearing Roach's responses to Keene's questions. I don't know about you, but here's what I think: if all those big dog economists knew the answer like they all claim they do, how come we are still heading down the abyss at the speed of light?
Keene's question was about Europe and Roach responded with cliché 'usual suspect' arguments that even kindergarden toddlers learn their first day at school. Social unrest, depression in the periphery of Europe, Greece being the 'lost son', and BS like this. Tom said, we know all that, have you got anything new to add? Actually, he said it with more courtesy, but it boiled down to it in effect. And then the wise man from MS responded, well, he said, remember what Papandreou did when he asked for a referendum? If that went through then all Greeks would have said no and that would be the end of EMU.
Now, if someone at the caliber of this particular big shot Stephen S. Roach says something immature, uninformed and plain stupid like this, then what can I say? I might go back to school and earn a degree in economics and then go for the next big thing, a Nobel Prize. I mean, how can someone with the cajones of a so-called Top International Economics Expert can say something like that? Does he really think Greeks are collectively the most stupid people on the blue marble planet and vote 'No' if that referendum went through? One thing I wouldn't call Greeks is stupid. Corrupt? You bet! Irresponsible? Right on! Immature? You bet, again! Seven year olds? Why not? Egomaniacs and egocentric to the level of absurd? Right again! Unethical? For many among them, yeah! But stupid? And vote 'No' to the EMU? Bite the hand that has been feeding them all along? And spend ice cold winter nights without fuel in their central heating burners? Or get no spare parts for their Porche Cayennes anymore? You must be shitting me. Now then. If Mr Roach and other big shots like him can so easily claim what he claims about something so friggin' obvious, I wonder what the value of their claims is in more complicated matters? That's probably why Obama left Krugman out of his cabinet.
Let me give you another example. Big shot Roach said that the Fed's QE policies can do nothing to guarantee long term sustainable economic growth. What did it do to the economy? he asked. OK, it brought down unemployment to 8.5%. But that's a long way from 5-6% being considered as a yardstick for growing economies.
Well, call me stupid, but I don't know how can someone still believe in these unemployment numbers. First, automation brought about an enormous productivity improvement the last 40 years. Tens of millions of jobs were lost due to that. The economy became global and the West decided to outsource their industries to low-cost labor Asia. In the meantime, Agriculture is getting killed in the Western world and increasingly exported to the third world too. At the same time desperate third world immigrants are flocking to the West to find their (mis)fortunes there. And aggravate an already disastrous situation. How could anyone expect unemployment to fall to 5% under these conditions? It could happen if we were forced to retire at 55 and work 3 days a week. And the rest of the time we spend in leisure so that new jobs are created in the leisure services sectors. Or the governments create new jobs for their electorates in the thousands again (like PASOK did in Greece) to self deceive themselves and their citizens about reaching ideal unemployment figures all over again. Well, I'm sorry, but this ain't gonna happen. Probably only Germany will maintain a healthy balance from a classic economic theory point of view because they have been capable in maintaining their know-how in-house and haven't kicked out their best of class industrial production to the third world the way the rest of us have done.
What is the conclusion? For the economy and it's traditional cliché indicators? I'm sure Roach and his peers in this world will continue their lives enlightening us with BS, while sipping their cocktails at the piano bars in Davos during the months of January. And passing arguments about the beauty of the emperor's new clothes. As for the actual economy of the people and by the people? We better start getting used at unemployment figures closer to 10% than 5% or there's something wrong with our thinking. I reckon...