As last week unfolded to reveal a eurozone banking ‘deal’ about to unravel, I flicked across some news channels on my satellite telly here. They all told me that a eurozone banking deal had been struck, that there was going to be “a new, bigger” failure fund, and that the details would be ironed out by the weekend. It was all complete tosh, but the televisual western mainstream media boys and girls these days don’t critique stuff any more: they have such a tough job just keeping up, the only thing they can do is relentlessly follow.2013 – especially from late Autumn onwards – has been a quite extraordinary year for cheated, manipulated and misused data. From the American ‘turnaround’ in February and Italian ‘recovery’ in April to the Spanish ‘emergence from recession’ in August and ‘dangerous eurozone deflation’ in October, a statistical world has been presented to us which simply doesn’t exist in physical, human, everyday economic form.
In the last month alone, we have had Britain’s ‘manufacturing surge’, Chancellor Osborne’s ‘Britain is booming’ statement to the Commons, daft JobcentrePlus employment fibs, the British debt being under-represented by 200%, the misrepresentation of UK December employment statistics…..and now, a ‘growth surge’ in the Q3 US economy which is, well – I mustn’t be too harsh – absolute rubbish.
But all of that disinformation has been broadly accepted by the media and then carelessly regurgitated to the Western electorates. There is growing evidence that significant minorities in society are sceptical of it, but that’s a post for another day: what I’m talking about here is the lack of any high-profile soapbox for much-needed contrarian analysis, and the both woeful and willful tendency of the seemingly quite intelligent professionals involved to spot the flaws for themselves.
The level of data discernment in the world today can be judged fairly easily by simply comparing stock price movements with actual performance in the US. A good example this past week was Blackberry.
From having captured sector generic status for its brand name, Blackberry then proceeded for some years to demonstrate a level of incompetence suggesting the firm’s owners might have been senior bureaucrats in another life. But yesterday, the ailing company’s shares rose 15.52%. This was the basis for the stock becoming a buy:
1. The announcement that BlackBerry and Foxconn – a Taiwanese company operating factories in China, and best known for making Apple’s iPhone and iPad – have signed a five-year agreement under which Foxconn will make BlackBerry’s devices.
2. There appear to be signs that Foxconn might help reduce BlackBerry’s manufacturing costs.
3. Blackberry CEO and Chairman John Chen told analysts on a conference call that he has set up a plan to get the company profitable by 2016.
None of these ‘factors’ add up. Foxconn is a maker, not a technically advanced design leader. Blackberry’s problem isn’t price, it’s the company’s Yesterday image as an innovator. And the CEO saying he has a plan is a ‘sign’ that’s up there with Brian’s shoe from Monty Python.
Meanwhile, BlackBerry released third-quarter earnings yesterday. They showed the company lost $4.4 billion during the quarter as revenue fell 56%.
Looking at this entirely typical example of the market directionalisers piling in, getting out, and then moving on to leave the slowcoaches dazed and broke, it’s not surprising that the Black Dude thinks he can release any old economic or employment drivel, with an interpretation dreamed up by Chance the gardener, and get away with it among the wishfully unthinking majority
But it doesn’t end there. As spectacular cockup Blackberry stormed ahead on news that they’d found a factory and had a plan, the hugely successful electrical retailer Best Buy saw its shares fall 4.09%.
One site I visited quoted ‘very little news’ (and another ‘no news of much relevance’) as a contributory factor in the fall. But while there is no news that Best Buy’s CEO has a plan, there is a sign the guy knows what he’s doing, as sales have boomed and the stock has risen 235% this year. That’s what I’d call big news, but it’s not the way stock markets work.
You see, Best Buy’s trading volume was nearly double the company’s three-month average because traders were selling positions to bring gains made straight to the bottom line…it being year-end and all. At the end of a fiscal or trading year, large trading conglomerates and blue chip institutional shareholders do this as a matter of course. It makes sense for them to do it, but it is a decision being taken with little or no thought for Best Buy’s plans. That’s the bourses, though: it’s just another reason why overdependence on this means of raising capital is silly. Amusingly, one site put forward this Freudian typo to describe the process:
Stick with your intuition guys, it’s the only way to fly. We also need more of it; because returning to the macro American economic picture, the reaction to yesterday’s Q3 US gdp growth figures displayed none whatsoever. Business Insider told us that Q3 growth “surged” to 4.1%, except that this was, on an annualised basis, miles out: the real figure is 3.6%.
Still, Britain would give much to have that growth figure. But let’s be real about this, can we? Bernanke made his ‘historic’ QE taper announcement two days earlier: does anyone, anywhere seriously imagine that Uncle Ben’s Mice hadn’t known that Q3 gdp figure in advance? The number gave the Fed the aperture to keep the markets calm. The Japanese did the same in 2006. It didn’t work out.
So let’s examine the number. The main reason given for the rise was ‘Businesses boosted inventories even more than the government had estimated last month’. So then, not a consumption measure….more a measure of Washington getting it wrong. OK, let’s move on.
The Q3 number shows the highest growth rate since 2012′s first quarter, when the economy expanded at an annual rate of 3.7%. That’s eighteen months ago, after which it went down to 1.2%. As the surge didn’t continue then, anyone have an idea why it should now?
If you do, then think before you mention it – here’s something most commentators missed: estimates of final demand fell to a 1.9% annual growth rate. Ahah. Now this is a consumption measure. And it says things went backwards.
To confirm the first point made earlier on these numbers, the US Commerce Department has in fact confirmed that inventory restocking added 1.68% out of 3.6% to growth. And let’s not forget that the Federal Government sticks QE activity into the pot as well…a nonsense that always makes me think of Danny Kaye’s signature rapid-talk shtick – perhaps along the lines of “The easing is pleasing as a constant of the sleazing when the sneezing and the wheezing of the economic growth thing is an omnipresent slow thing and the Emperor has no clothing”.
Back on Planet Earth, we have this thing called Christmas. People who make and sell things sell in and stock up for Q4, because Q4 has Christmas in it. See Dick shoving more stock up the distribution’s backside. See Dick hoping that Jane will buy all of it. Do not see an economic surge: there isn’t one. Instead, look to see what happens at Christmas. And then do an audit of how many items bought were imported.
I hate to rain on the parade again re this one, but imported goods gained another 1.9% in Q3. Which means that, netted down, precisely nothing, diddly-squat, zilch in these numbers will do anything except make the Federal deficit worse. And a good many sector observers are not that optimistic about Santa bringing in more cash via the chimney this year anyway….
The New York Times from a month ago: ‘As the holiday shopping season accelerates with aggressive deals, Walmart, the nation’s largest retailer, joined other companies in painting a gloomy picture of consumer spending for the rest of the year.’
Reuters from two weeks ago: ‘Heavy discounting took a toll on U.S. retail sales during the Thanksgiving weekend as shoppers spent almost 3% less than they did a year earlier.’
Time Magazine yesterday: ‘Holiday sales have been lackluster for the most part, and retailers are eager to clear out existing inventory…[so]…retailers are sure to roll out “after Christmas” sales this year by Dec. 23, if not sooner ….consumers will see major discounting in the days ahead. Think: 70% or more off in many cases.’
I will give anyone five quid at 10-1 that Q4 inventory will be low, and retail performance bloody. What the markets might well do in the light of that outcome is anyone’s guess these days.
Now what Ben and Janet’s Excellent Tapering Adventure has also promised (which it can’t promise because nobody can, but let’s not go there) is that there will be nought per cent (ish) interest rates from now until every retired person is bankrupt. Not only is that bad and uncaring social policy, it is also extremely dumb. The much-maligned Baby Boomers are now between 60 and 70: there are more of them than ever before, and they have the money to spend without the overheads and kids to make them stay at home.
When I say, “the money”, all things are relative: the majority of Americans (75%) nearing retirement age have less than $30,000 in their savings fund, and little or nothing in the way of a pension. But 25% are well off…and that’s a much higher figure than for America right across the demographic spectrum. There are around 112 million retired Americans, and that means 28 million well-heeled people. On average, Zirp has removed in the region of $14,000 per annum of their spending power…not even counting the emotional lack of confidence involved. That’s just short of half a trillion bucks.
As for the 75%, the cost of increased welfare for them is pretty near incalculable. Plus what many of them are doing is carrying on at work….which means fewer spaces for unemployed youth – an incredibly bad social move if only on the grounds of poor youths being a lot more dangerous and uppity than poor old folks.
Now just supposing that – instead of using QE to give the banks and multinationals cheap money and Zirp to help repair (hahaha) bank balance sheets – the Obama Administration had done this:
1. Exempted the retired from Zirp and given them tax relief for buying US-made products rather than imports
2. Given the corporate sector QE only on the condition of x% of investment going into new product development and/or job training
3. Given those unhappy about leaving the workplace a social job (as in, a proper social service job) for pocket-money wages.
I would call this directionalised taxation, but the term has a ropey history so I won’t.
My best guesstimate would be that by doing this, America would have:
* a 10% lower deficit than now
* higher employment rates
* a nicer community environment with the old better integrated into it
* a new generation of products ready to compete properly in export markets
* a lot fewer bankers
* by force majeur, a radically reformed banking system
* a shrinking inequity of wealth, as opposed to a growing one.
Now obviously, none of these ideas were even thought about, because all of them involved putting the stability of both society and government bond futures before the heavily bonused wealth of 44,000 people working in roughly eleven banking firms and their subsidiaries. But it is time for me to take my foot off the sarcasm accelerator, and return it to the tracteur tondeuse accelerator, so I will close with this final point.
In both Britain and the US at the minute (and most of northern Europe) there is a 24/7 stream of obfuscatory and delusional bollocks being put forward as a picture of What Is. It clearly isn’t, but we lack (a) a media set with the motivation in some cases (or the skills in others) to point this out (b) an educated and focused electorate ready or able to spot the near-infinite mendacity, and (c) any strong constitutionally aware legislators to stand up to the creeping desire of the Executive branch and its growing drive to silence every contrary opinion. None of that is helped by the fact that the branch is made of wood, and broken.
It’s not the first time The Slog has pointed this out, and it won’t be the last. But every citizen with a brain should now be thinking of how his or her cerebral and creative capacity can be put to the use of the Resistance. And every member of the virtual Maquis should be burying differences and sharpening axes.