Skip to main content

Stupid economists: How Josh Feinman proves my point

So, Globalization is at risk, its not only Donald Trump that is the problem, but there are waves of resentment across the world about further opening of markets.

In fact, over the past 30 years the level of equality in countries has risen dramatically:

The linchpin here is the increase (except Brazil and Mexico) of the GINI coefficient in most
OECD countries; Canada the least the Sweden the most -- but the latter one may be entirely due to IKEA...  Bottom line, voters have taken notice that the deregulation of market has resulted in less wealth and more insecurity.  The reason Trump won is because he promised "something different"  He may not be able to delivery (I am not sure he knows what to deliver) bit its sounds better than what Clinton offered which was more of the same...

However, Mr Feinman suggest that the reason deregulation and market opening is getting a bad press is entirely driven by poor explication of the benefits of free trades and other market reforms.  In fact, the people got it, they understand the limits of the market and how it has directly affected their lives; lower wages, less security -- they may find via Trump's administration that the US system is about to get a lot meaner -- expect the destruction of Obamacare within the first few weeks of the new administration.  Congress may offer a fig leaf to Trump; approve the new law or will kill the whole thing via reconciliation (that would end the ACA immediately).

The problem of Deutsch Bank's economist is that he lives in a strange world where reality is somewhat different than what "ordinary folks" face, he lives in Connecticut in one of the best neighborhoods and his entire experience about trade policy is driven by book learning.  If you worked for Carrier your entire life welding bits an pieces together, the loss of your livelihood to a Mexican welder is a clear and immediate threat, as such you view Trumps' intervention as a good thing -- it did, for a time save your job.  The benefits of market liberalization has been the top 10% of America's for the rest, the 90% saw no gain or real losses.

That is the real problem; Americans as a whole didn't see any improvement in their lifestyle over the past 30 years, their revenues have at best been static or dropped and job security is out of the door.  That's what "the people" understand, you cannot explain that away


Popular posts from this blog

Trucker shortage? No a plan to allow driverless rigs

There are still articles on how America is running out of truckers -- and that its a huge problem, except its not a problem, if it was a problem salaries would rise to so that demand would clear. Trucking is one of those industry where the vast majority of participants are owner/operators and therefore free agents.

Salaries and cost are extremely well know, "industry" complains that there are not enough truckers, yet wages continue to fall... Therefore there are still too many truckers around, for if there was a shortage of supply prices would rise, and they don't.

What there is though is something different; there is a push to allow automatic rigs to "operate across the US", so to encourage the various authorities to allow self driving rigs you talk shortage and hope that politicians decided that "Well if people don't want to work, lets get robots to do the work" or words to that effect.

This has nothing to do with shortage of drivers, but every…

Every punter says oil prices are on the rise: Oil hits $48/bbl -- lowest since September 2016

What the hell?

How could this be, punters, advisors, investment bankers all agreed commodity prices  in general and oil prices in particular are on the rise...its a brave new era for producers and exporters -- finally the world is back and demand is going through the roof, except not so much!

What happened?  Well energy is complicated, the world operates in a balance -- 30 days of physical reserves is about all we've got (seriously) this is a just in time business.  So the long term trend always gets hit by short term variations.

Global production over the past 12 months has risen by somewhat less than 1.5% per annum.  As the world market changes production becomes less energy intensive (maybe), but the reality is that the world is growing more slowly -- America Q4 GDP growth was around 1.9% (annualized) Europe is going nowhere fast (the GDP growth in Germany is overshadowed by the lack of growth in France, Italy, Spain (lets say 27 Euro members generated a total GDP growth of 1.2…

Paying for research

This morning I was reading that CLSA -- since 2013 proudly owned by CITIC -- was shutting down its American equity research department -- 90 people will be affected!

Now the value of a lot of research is limited, that is not to say that all research is bad. In fact, I remember that GS's Asia Aerospace research was considered the bible for the sector.  Granted, there was little you could do with the research since the "buy" was for Chinese airlines...that were state owned.  Still it was a vey valuable tool in understanding the local dynamics.  It seems that the US has introduced new legislation that forces brokers to "sell" their research services!  Figures of $10,000 an hour have been mentioned...

Now, research can be sold many times; if GS has 5000/6000 clients they may sell the same research 300x or 400x (I exaggerate) but this is the key -- Those who buy the research are, I presume, prohibited from giving it away or selling it, at the same time the same rese…