This blog has moved to a new location using Wordpress.
http://atradersrant.wordpress.com/
A trader ranting over there now (all the other cool names were already taken).
Regards,
Thursday, January 19, 2012
Wednesday, December 21, 2011
Definitive technicals as applied to the ECRI WLI
Am picking apart some definitive technical analysis as applied to one of arguably few reputable economic indicators, the ECRI Weekly Leading Index (WLI). Leaving aside all and any assessment of it's application to any purported economic reality, this exploration is purely technical analysis of the publicly available WLI data series, and provides a summary of where it sits amongst the myriad of purported recoveries or otherwise as regurgitated daily by the main stream media.
I cannot suggest if this data series has either a linear or power series (compounded, polynomial) relationship to the broader economic state of play, and merely present several methods of analysis that indicate the possibility that all is not what it seems.
Whole of data series linear regression showing +/- StdDev bands
The most obvious 2 observations are a) the rate of increases into 2007, broken by b) massive correction to the underside in 2008/09. This parallels with the observed outcomes of the GFC in 2008. Note however the WLI did not foresee the 06May2010 flash crash, yet the WLI responded to this event very abruptly. There is a 6 standard deviation correction to the March 2009 low, and we currently reside -3.5SD's under the linear regression average. Obviously a weak recovery to date.
Note that this data series started during a period of 8 years indicating economic stagnation from 1967 to 1975. This is fortuitous since it allows a direct comparison to what might be a similar period as indicated by the ECRI WLI currently in 2011, from the June 2007 high.
Same whole of series, added moving averages (short, medium and long term)
- moving averages most clearly show momentum, and comparison to previous trend movements
When analysing many instruments and asset trends, there is a distinctive increase in rates of change and cyclic volatility from 1996 onwards, attributable to a marked and definite increase in electronic analysis and trading, and easing of market access coupled with excitement and fervor over the technology sector. This euphoria would eventually end in the very public bursting of the dot.com bubble and reveal massive stock price manipulation in what was to become the new black in IPO's spinning and laddering. For this exercise, I am using the point that it last departed above the current linear regression average (being 1995) and using January 1995 so as to commence with a whole year.
Closeup of linear channels 1995 onwards
Applying some simple moving averages to the data series further highlights that we are yet to clear the obstacles of the GFC of 2008. As can be clearly seen in the following chart, with the addition of some Fibonacci levels
- showing major trend lines overlayed also
Combining some RSI and MACD analysis (not shown) of the ECRI WLI analysis, we can see a prevailing weakness in the forward movement of this Index indicating upwards direction being weak and limited, sideways trending being very likely and a possibility of a further decline into a dip and recovery within the next 12 months to Dec2012.
Low order dynamic bands applied to 1995 portion
CONCLUSION: Current situation indicates clearly we are still in a period of sustained weakness showing no immediate recovery. Momentum is negative (downwards) while a rise is not impossible, it is merely rallying in a down trend (a bear rally). Confirmation of a clear break of this downward trend is an ECRI WLI reading above 125. I would mark a recovery to resumed growth as confirmed only above 129.
Using a Dec1971 value of 60, and applying 2% CAGR to the ECRI WLI, we project a value of 132.5 for Dec2011. Clearly we are below this. Given that we are also below linear regression of 138 by some 3.5 standard deviations, it does suggest that the universe is conspiring aginst mean reversion, and that upwards progress is imminent. Mean reversion and regression to trends are poetry when you are placed on the right side of the move.
Very simply, upwards is a good thing. It's a matter of getting it there, and keeping it there. Eventually further growth will become the most obvious certainty. But timing isn't everything, it is the only thing. The downside is that we are in a period fo 6-8 years that is sideways to down still. I respect the lucid and thorough Kyle Bass who suggests large corrections to housing markets last anywhere between 6-9 years. Using 6 years aligns with the previous history of the ECRI low in 1975, placing another possible cyclic low still to come in Dec2012.
Hence I would put a floor of 120 not to break (must hold), and a ceiling of 129 that it needs to break (confirm recovery and growth) - buy the dip, sell the fade in the mean time.
Regards,
I cannot suggest if this data series has either a linear or power series (compounded, polynomial) relationship to the broader economic state of play, and merely present several methods of analysis that indicate the possibility that all is not what it seems.
Whole of data series linear regression showing +/- StdDev bands
The most obvious 2 observations are a) the rate of increases into 2007, broken by b) massive correction to the underside in 2008/09. This parallels with the observed outcomes of the GFC in 2008. Note however the WLI did not foresee the 06May2010 flash crash, yet the WLI responded to this event very abruptly. There is a 6 standard deviation correction to the March 2009 low, and we currently reside -3.5SD's under the linear regression average. Obviously a weak recovery to date.
Note that this data series started during a period of 8 years indicating economic stagnation from 1967 to 1975. This is fortuitous since it allows a direct comparison to what might be a similar period as indicated by the ECRI WLI currently in 2011, from the June 2007 high.
Same whole of series, added moving averages (short, medium and long term)
- moving averages most clearly show momentum, and comparison to previous trend movements
When analysing many instruments and asset trends, there is a distinctive increase in rates of change and cyclic volatility from 1996 onwards, attributable to a marked and definite increase in electronic analysis and trading, and easing of market access coupled with excitement and fervor over the technology sector. This euphoria would eventually end in the very public bursting of the dot.com bubble and reveal massive stock price manipulation in what was to become the new black in IPO's spinning and laddering. For this exercise, I am using the point that it last departed above the current linear regression average (being 1995) and using January 1995 so as to commence with a whole year.
Closeup of linear channels 1995 onwards
Applying some simple moving averages to the data series further highlights that we are yet to clear the obstacles of the GFC of 2008. As can be clearly seen in the following chart, with the addition of some Fibonacci levels
- showing major trend lines overlayed also
Combining some RSI and MACD analysis (not shown) of the ECRI WLI analysis, we can see a prevailing weakness in the forward movement of this Index indicating upwards direction being weak and limited, sideways trending being very likely and a possibility of a further decline into a dip and recovery within the next 12 months to Dec2012.
Low order dynamic bands applied to 1995 portion
CONCLUSION: Current situation indicates clearly we are still in a period of sustained weakness showing no immediate recovery. Momentum is negative (downwards) while a rise is not impossible, it is merely rallying in a down trend (a bear rally). Confirmation of a clear break of this downward trend is an ECRI WLI reading above 125. I would mark a recovery to resumed growth as confirmed only above 129.
Using a Dec1971 value of 60, and applying 2% CAGR to the ECRI WLI, we project a value of 132.5 for Dec2011. Clearly we are below this. Given that we are also below linear regression of 138 by some 3.5 standard deviations, it does suggest that the universe is conspiring aginst mean reversion, and that upwards progress is imminent. Mean reversion and regression to trends are poetry when you are placed on the right side of the move.
Very simply, upwards is a good thing. It's a matter of getting it there, and keeping it there. Eventually further growth will become the most obvious certainty. But timing isn't everything, it is the only thing. The downside is that we are in a period fo 6-8 years that is sideways to down still. I respect the lucid and thorough Kyle Bass who suggests large corrections to housing markets last anywhere between 6-9 years. Using 6 years aligns with the previous history of the ECRI low in 1975, placing another possible cyclic low still to come in Dec2012.
Hence I would put a floor of 120 not to break (must hold), and a ceiling of 129 that it needs to break (confirm recovery and growth) - buy the dip, sell the fade in the mean time.
Regards,
Sunday, December 4, 2011
Analysis of Australian Trade - Part 3 of 2
Part 1 Part 2
In the spirit of the great Douglas Adams' Trilogy of 4 books on the Life, the Universe and Everything, this is now Part 3 of 2. It could easily be much more, but this was intended to be a first level break down of our trade performance only. Unfortunately I couldn't find 42 as the answer for anything in this 3 Part appraisal.
This final part wraps up with current trend growth rates including GDP. As a result of 2 recent online video clips (highly recommended viewing; being the Munk Debate Japan vs USA and the Kyle Bass Redux) I am slowly joining the dots on what seems to matter in the broader sense of national account trends. The biggest 2 points of difference I see between Japan and the USA (at least so far) are (a) the population pyramids (demographic trends) and (b) natural resources. I plan on getting around to some in depth analysis on both Japan and the USA at some stage, but have focused on Australia in these series.
So it is with thanks to these recent insights, that I see population growth rates as equally important to economic analysis as anything else. This is probably due in part to the PPP (purchasing power parity) used in FX valuation models when reducing of many key economic indicators to per for capita comparison. As a non-economist, being a self taught hack the importance of many seemingly relevant yet inquisitive tangents crystallizes after the fact.
(nominal, current $AUD, periods as noted)
AUSTRALIA'S GDP TREND
Presently, nominal current $ GDP growth is running at 8.2% YoY down from 8.5% the previous quarter. Deduct CPI for approximate real GDP growth as the balance. While this number looks supremely healthy, there is a good argument to be made that is has to remain so in order to maintain the present status quo. A real GDP growth limit of around 2% has been set via general consensus of US analysts that is the threshold of sustained positive impacts (above 2%) and sustained negative impacts (below 2%) on unemployment.
The linear regressions of the nominal GDP growth rates indicate a long term slowing down of growth. This is certainly in line with current uncertainty in the global arena, and supports this being Phase 2 of Australia's progress of development from an Emerging Market. The addition of the population growth is considered important. It highlights any deterioration in GDP/cap - a measure of standard of living. Essentially if GDP growth drops below the population growth, it can provides a signal for economic contraction. In simple terms, local conditions would then be dependent on the corresponding movement in the overall money supply as to the prices and available credit. The reductions in GDP growth also correlate with larger trends in the US and Japan.
The numbers on this for Japan would be intriguing, given it is forecasting a reduction in forward population. In Japan's case, if the reduction in population rate exceeds the reduction in GDP, it is still seen as a sign of prosperity per capita, however money supply and other capital flow factors beyond the scope of this author would be of higher consideration. However there remains something in the PPP FX calculation that is causing the ongoing appreciation of the YEN - perhaps the rate of reduction of $economic $indicators is occuring at a slower pace than the rate of decline in the Japanese population? (a guess).
TECHNICAL ASSESSMENT - of rates of change, poly and linear
Without delving into the many and varied valid reasons behind the use of non-linear (polynomial) and linear regression curve fitting, the following are the results of relatively mild 3rd order polynomial versus linear regression analysis of each of the 7 trade data sets using the Jan1998 to Sep2011 data range (23years). While the choice of range is arbitrary (can be more 'local', as in a shorter time series using less data), I have done this using the full range of available data that I have access to from the ABS.
LINEAR REGRESSION OF TRADE TRENDS
NON-LINEAR POLY REGRESSION OF TRADE TRENDS
The charts above are a warning that any likely regression to the linear mean results in a negative trade balance. Numeric representation of the above charts is provided in the summary table below.
Tracking with the nominal GDP growth at 8% should be a reasonable target average for non-linear curve fit. Should GDP not sustain 8% it stands to reason what the ensuing result for the trade balance will be.
Since I included the net-trade BOT G&S less merchandise calculation, I realised the non-merchandise BOT might be a warning. It shows the worst deficit trading non-merchandise has ever been, and is 3x (a 200% increase) on the previous 20 years worst performance. I have not the means to identify the composition of this net deficit. Thanks again for the trade surplus due to our resources and primary industries!
Our present handling of our surplus trade categories is not a positive sign for the future prosperity of Australia in any extent where we depend on a sustained surplus for our standard of living being derived in the current manor. In time, I hope to dig deeper to see which are our greatest rates from change with respect to shrinking surpluses, and expanding deficits.
That's enough for now I think.
Part 1 Part 2
Regards,
In the spirit of the great Douglas Adams' Trilogy of 4 books on the Life, the Universe and Everything, this is now Part 3 of 2. It could easily be much more, but this was intended to be a first level break down of our trade performance only. Unfortunately I couldn't find 42 as the answer for anything in this 3 Part appraisal.
This final part wraps up with current trend growth rates including GDP. As a result of 2 recent online video clips (highly recommended viewing; being the Munk Debate Japan vs USA and the Kyle Bass Redux) I am slowly joining the dots on what seems to matter in the broader sense of national account trends. The biggest 2 points of difference I see between Japan and the USA (at least so far) are (a) the population pyramids (demographic trends) and (b) natural resources. I plan on getting around to some in depth analysis on both Japan and the USA at some stage, but have focused on Australia in these series.
So it is with thanks to these recent insights, that I see population growth rates as equally important to economic analysis as anything else. This is probably due in part to the PPP (purchasing power parity) used in FX valuation models when reducing of many key economic indicators to per for capita comparison. As a non-economist, being a self taught hack the importance of many seemingly relevant yet inquisitive tangents crystallizes after the fact.
(nominal, current $AUD, periods as noted)
AUSTRALIA'S GDP TREND
Presently, nominal current $ GDP growth is running at 8.2% YoY down from 8.5% the previous quarter. Deduct CPI for approximate real GDP growth as the balance. While this number looks supremely healthy, there is a good argument to be made that is has to remain so in order to maintain the present status quo. A real GDP growth limit of around 2% has been set via general consensus of US analysts that is the threshold of sustained positive impacts (above 2%) and sustained negative impacts (below 2%) on unemployment.
The linear regressions of the nominal GDP growth rates indicate a long term slowing down of growth. This is certainly in line with current uncertainty in the global arena, and supports this being Phase 2 of Australia's progress of development from an Emerging Market. The addition of the population growth is considered important. It highlights any deterioration in GDP/cap - a measure of standard of living. Essentially if GDP growth drops below the population growth, it can provides a signal for economic contraction. In simple terms, local conditions would then be dependent on the corresponding movement in the overall money supply as to the prices and available credit. The reductions in GDP growth also correlate with larger trends in the US and Japan.
The numbers on this for Japan would be intriguing, given it is forecasting a reduction in forward population. In Japan's case, if the reduction in population rate exceeds the reduction in GDP, it is still seen as a sign of prosperity per capita, however money supply and other capital flow factors beyond the scope of this author would be of higher consideration. However there remains something in the PPP FX calculation that is causing the ongoing appreciation of the YEN - perhaps the rate of reduction of $economic $indicators is occuring at a slower pace than the rate of decline in the Japanese population? (a guess).
TECHNICAL ASSESSMENT - of rates of change, poly and linear
Without delving into the many and varied valid reasons behind the use of non-linear (polynomial) and linear regression curve fitting, the following are the results of relatively mild 3rd order polynomial versus linear regression analysis of each of the 7 trade data sets using the Jan1998 to Sep2011 data range (23years). While the choice of range is arbitrary (can be more 'local', as in a shorter time series using less data), I have done this using the full range of available data that I have access to from the ABS.
LINEAR REGRESSION OF TRADE TRENDS
NON-LINEAR POLY REGRESSION OF TRADE TRENDS
The charts above are a warning that any likely regression to the linear mean results in a negative trade balance. Numeric representation of the above charts is provided in the summary table below.
Tracking with the nominal GDP growth at 8% should be a reasonable target average for non-linear curve fit. Should GDP not sustain 8% it stands to reason what the ensuing result for the trade balance will be.
Since I included the net-trade BOT G&S less merchandise calculation, I realised the non-merchandise BOT might be a warning. It shows the worst deficit trading non-merchandise has ever been, and is 3x (a 200% increase) on the previous 20 years worst performance. I have not the means to identify the composition of this net deficit. Thanks again for the trade surplus due to our resources and primary industries!
Our present handling of our surplus trade categories is not a positive sign for the future prosperity of Australia in any extent where we depend on a sustained surplus for our standard of living being derived in the current manor. In time, I hope to dig deeper to see which are our greatest rates from change with respect to shrinking surpluses, and expanding deficits.
That's enough for now I think.
Part 1 Part 2
Regards,
Saturday, December 3, 2011
Inside Australia's trade performance - Part 2
Part 1 Part 3
In continuing Part 2 of the analysis of Australia's trade performance, I have updated Part 1 (charts & text) to clarify the Merchandise Categories of that initial analysis. The whole of the Balance of Trade (BOT) is presented in this Part 2 which is Total Goods and Services as per the ABS data series. In doing it this way, you will see that Total Balance of Trade trend is comprised of 60% Merchandise Trade anyhow, and the two trends are not discernible at a casual glance. Even under scrutiny, the trend analysis from Part 1 shows to be more than valid for forecasting possible future trade balances.
Also I show where this trade is coming and going from by Country, as well as the contribution of the trade by Australian State (that is sure to excite some justifiable interstate arguments). Finally some facts and figures on GDP are presented in Part 3. What is of increasing concern is the amount of volatility that can be seen in the late stages (since 2008) of the mature growth curves. Volatility is not stability, and history dictates that in mature curves (>30 years), above average rates of increase are not sustained, with pullbacks (corrections) typical of what was seen in 2008. The frequency to which they occur is dependent in part on what can be done (if anything) to stabilise the underlying growth (regression) back to sustainable values over the longer term. The Australian GDP charts indicate this very effectively in Part 3. Presently, our GDP growth has returned to 8.2% growth YoY as measured at last quarter Jun2011 - this was down from 8.5% YoY as measured in Mar2011. Modern GDP growth (post 1990) peaked at 9.1% during 2008. Point being, what underlying natural rate of growth is sustainable that smooths out the recent volatilility? or is volatility here to stay?
(nominal balance, AUD $Millions, monthly except where indicated)
AUSTRALIA - TOTAL GOODS and SERVICES BALANCE OF TRADE (1971, monthly)
AUSTRALIA - GOODS and SERVICES versus Merchandise (1988, monthly)
Hence it's obvious the trends of the BOT and Merchandise are virtually one and the same at cursory glance. Merchandise represents 60% of all of Australia's trade, of which we already know is better than 80% resources. When you remove the merchandise balance from the total balance, the remaining trade is remarkably closely net neutral (balanced), as per below, {edited} showing recent sustained deficit since 2010 - offset by recent boosted growth in resources export revenue.
AUSTRALIA - GOODS and SERVICES LESS Merchandise (1988, monthly)
Merchandise surplus is 60% of trade account credits, while deficits are 55% of trade account debits. This adds further credibility to the argument that the ongoing resources boom is the only thing keeping Australia's trade balance in the black. Any marked change to global conditions will catch Australian politicians with their pants further down than they already are.
AUSTRALIA - Top 7 surplus trade partners
*worth noting that up until 2008, China was our second worst trading deficit partner, behind USA. Now it is our second highest surplus partner due only to an insatiable (so far) demand for resources, mainly iron ore and coal.
Further to the concern that China is only recently our new best friend (since 2008), is that the 7 countries above represent a staggering 90% (!!!) of our total surplus merchandise trade. This introduces a more worrying national security issue brought about by our inherent dependency not only the large volumes of few resources, but the tightly located (and colocated) market region to which they are served. Any instability in the East Asia/APAC region that disrupts any of these major surplus export partners can alter the flow of trade, placing these resources (or any of the major surplus trade categories) with increased strategic importance from a foreign policy point of view.
Equally importantly, Australia must not only encourage alternative export markets, but also be proactive in assisting in the resolution of trade barriers that might disrupt existing or future volumes. This is not excluding assisting in the development and/or application of new and better efficiencies/processes/technologies in adapting to changes in environmental requirements of heavy industry and energy resources.
AUSTRALIA - Bottom 7 deficit trade partners
* USA and Germany have been consistently worse deficit trader (predominantly defense, vehicles, and technology). Note the large volatility now seen in UK trade. This is masking a deterioration in the UK trend (into deficit).
By contrast with the Top 7 contributions to the surplus, the above 7 deficit trading partners contribute 57.5% of the total deficit trading. This difference in concentration (of influence, or spread of contribution) introduces much greater difficulty in forcing any rebalance back into any future imbalance. Since exports are explicitly dependent on global demand and pricing factors, whereas imports are increasingly driven by a growing lack of local production/G&S imbalance and (often poor) consumer discipline. The latter being where the US now finds itself with overwhelming challenges.
Current policies will provide very little defense to arrest the outflow of capital due to the nature of our increased dependency on imported produced goods. Further work is needed by this author to identify the largest rates of change of deteriorating surpluses, and increasing deficits.
AUSTRALIA BALANCE OF TRADE - by State
As is obvious from the charts below (and to those with an ear within 1 foot of the ground), Western Australia is well within it's rights to dominate any discussion on policies concerning resources, followed by Queensland as a distant second.These 2 states dominate the export of natural resources coal, iron ore, aluminum, copper and natural gas as well as livestock and other large primary industry contributions. It is surprising given the large surplus trade for Queensland, that the balance shows periods of substantial cyclic offsets with the underlying balance well short of Western Australia. Hopefully this is indicative of broader development and needed improvements (yes, I'm a Qlder).
WA is tracking the ongoing growth in iron ore exports, having surpassed coal in 2010. Qld has not followed the sustained coal export trend as it must be offsetting against rising import consumption so far for 2011.
It is obvious the 2 southern states of NSW and Victoria are large net consumers and outstrip the combined balance of the remainder of Australia excluding Western Australia, making even more obvious our growing dependency on resources. It sounds like a broken record doesn't it? Likewise, there would be no policies in place to address this imbalance of capital flows, with the recent grab for capital by this Federal Government coming from WA, and to a lessor extent Qld and SA. This author has his own personal opinions on the likely success (or otherwise) of the MRRT tax restructure, that is now largely intrinsically dependent on the extent and nature of FDI and the foreign controlling interests in our natural resources (privately held or public listed).
In short summary - the above combined analysis shows that Australia's surpluses are tightly concentrated, while it's deficits are widely scattered. Addressing any imbalance arising from conditions beyond our control (and pretty much anything will be beyond our control) is going to be a long distance outside current considerations of this present (or even previous) Governments. In terms of investment positions and future risk, Australia has it's bare arse facing the wind - this is presently an undesirable all or nothing unhedged position with respect to resources. Good while the going is good, with plenty of downside when things go pearshaped.
Being in this position would make any sensible person more protective of the goose laying the golden eggs. But those people do not find themselves in politics. Does this Government have any contingency plan in place for considering future trade impairments? Judging by the recent knee jerk hysterics that resulted in the disruption of the live export market, the answer is obvious to this author. But it's important for people to understand why large industry lends a heavy hand from time to time.
We used to have more local industries than we presently do, and the numbers are getting tighter for many more of them.
Part 1 Part 3
Regards,
In continuing Part 2 of the analysis of Australia's trade performance, I have updated Part 1 (charts & text) to clarify the Merchandise Categories of that initial analysis. The whole of the Balance of Trade (BOT) is presented in this Part 2 which is Total Goods and Services as per the ABS data series. In doing it this way, you will see that Total Balance of Trade trend is comprised of 60% Merchandise Trade anyhow, and the two trends are not discernible at a casual glance. Even under scrutiny, the trend analysis from Part 1 shows to be more than valid for forecasting possible future trade balances.
Also I show where this trade is coming and going from by Country, as well as the contribution of the trade by Australian State (that is sure to excite some justifiable interstate arguments). Finally some facts and figures on GDP are presented in Part 3. What is of increasing concern is the amount of volatility that can be seen in the late stages (since 2008) of the mature growth curves. Volatility is not stability, and history dictates that in mature curves (>30 years), above average rates of increase are not sustained, with pullbacks (corrections) typical of what was seen in 2008. The frequency to which they occur is dependent in part on what can be done (if anything) to stabilise the underlying growth (regression) back to sustainable values over the longer term. The Australian GDP charts indicate this very effectively in Part 3. Presently, our GDP growth has returned to 8.2% growth YoY as measured at last quarter Jun2011 - this was down from 8.5% YoY as measured in Mar2011. Modern GDP growth (post 1990) peaked at 9.1% during 2008. Point being, what underlying natural rate of growth is sustainable that smooths out the recent volatilility? or is volatility here to stay?
(nominal balance, AUD $Millions, monthly except where indicated)
AUSTRALIA - TOTAL GOODS and SERVICES BALANCE OF TRADE (1971, monthly)
AUSTRALIA - GOODS and SERVICES versus Merchandise (1988, monthly)
Hence it's obvious the trends of the BOT and Merchandise are virtually one and the same at cursory glance. Merchandise represents 60% of all of Australia's trade, of which we already know is better than 80% resources. When you remove the merchandise balance from the total balance, the remaining trade is remarkably closely net neutral (balanced), as per below, {edited} showing recent sustained deficit since 2010 - offset by recent boosted growth in resources export revenue.
AUSTRALIA - GOODS and SERVICES LESS Merchandise (1988, monthly)
Merchandise surplus is 60% of trade account credits, while deficits are 55% of trade account debits. This adds further credibility to the argument that the ongoing resources boom is the only thing keeping Australia's trade balance in the black. Any marked change to global conditions will catch Australian politicians with their pants further down than they already are.
AUSTRALIA - Top 7 surplus trade partners
*worth noting that up until 2008, China was our second worst trading deficit partner, behind USA. Now it is our second highest surplus partner due only to an insatiable (so far) demand for resources, mainly iron ore and coal.
Further to the concern that China is only recently our new best friend (since 2008), is that the 7 countries above represent a staggering 90% (!!!) of our total surplus merchandise trade. This introduces a more worrying national security issue brought about by our inherent dependency not only the large volumes of few resources, but the tightly located (and colocated) market region to which they are served. Any instability in the East Asia/APAC region that disrupts any of these major surplus export partners can alter the flow of trade, placing these resources (or any of the major surplus trade categories) with increased strategic importance from a foreign policy point of view.
Equally importantly, Australia must not only encourage alternative export markets, but also be proactive in assisting in the resolution of trade barriers that might disrupt existing or future volumes. This is not excluding assisting in the development and/or application of new and better efficiencies/processes/technologies in adapting to changes in environmental requirements of heavy industry and energy resources.
AUSTRALIA - Bottom 7 deficit trade partners
* USA and Germany have been consistently worse deficit trader (predominantly defense, vehicles, and technology). Note the large volatility now seen in UK trade. This is masking a deterioration in the UK trend (into deficit).
By contrast with the Top 7 contributions to the surplus, the above 7 deficit trading partners contribute 57.5% of the total deficit trading. This difference in concentration (of influence, or spread of contribution) introduces much greater difficulty in forcing any rebalance back into any future imbalance. Since exports are explicitly dependent on global demand and pricing factors, whereas imports are increasingly driven by a growing lack of local production/G&S imbalance and (often poor) consumer discipline. The latter being where the US now finds itself with overwhelming challenges.
Current policies will provide very little defense to arrest the outflow of capital due to the nature of our increased dependency on imported produced goods. Further work is needed by this author to identify the largest rates of change of deteriorating surpluses, and increasing deficits.
AUSTRALIA BALANCE OF TRADE - by State
As is obvious from the charts below (and to those with an ear within 1 foot of the ground), Western Australia is well within it's rights to dominate any discussion on policies concerning resources, followed by Queensland as a distant second.These 2 states dominate the export of natural resources coal, iron ore, aluminum, copper and natural gas as well as livestock and other large primary industry contributions. It is surprising given the large surplus trade for Queensland, that the balance shows periods of substantial cyclic offsets with the underlying balance well short of Western Australia. Hopefully this is indicative of broader development and needed improvements (yes, I'm a Qlder).
WA is tracking the ongoing growth in iron ore exports, having surpassed coal in 2010. Qld has not followed the sustained coal export trend as it must be offsetting against rising import consumption so far for 2011.
It is obvious the 2 southern states of NSW and Victoria are large net consumers and outstrip the combined balance of the remainder of Australia excluding Western Australia, making even more obvious our growing dependency on resources. It sounds like a broken record doesn't it? Likewise, there would be no policies in place to address this imbalance of capital flows, with the recent grab for capital by this Federal Government coming from WA, and to a lessor extent Qld and SA. This author has his own personal opinions on the likely success (or otherwise) of the MRRT tax restructure, that is now largely intrinsically dependent on the extent and nature of FDI and the foreign controlling interests in our natural resources (privately held or public listed).
In short summary - the above combined analysis shows that Australia's surpluses are tightly concentrated, while it's deficits are widely scattered. Addressing any imbalance arising from conditions beyond our control (and pretty much anything will be beyond our control) is going to be a long distance outside current considerations of this present (or even previous) Governments. In terms of investment positions and future risk, Australia has it's bare arse facing the wind - this is presently an undesirable all or nothing unhedged position with respect to resources. Good while the going is good, with plenty of downside when things go pearshaped.
Being in this position would make any sensible person more protective of the goose laying the golden eggs. But those people do not find themselves in politics. Does this Government have any contingency plan in place for considering future trade impairments? Judging by the recent knee jerk hysterics that resulted in the disruption of the live export market, the answer is obvious to this author. But it's important for people to understand why large industry lends a heavy hand from time to time.
We used to have more local industries than we presently do, and the numbers are getting tighter for many more of them.
Part 1 Part 3
Regards,
Thursday, December 1, 2011
A detailed look inside Australia's trade performance
(edit) Part 1 of 2 - Merchandise Trade Series (update to charts)
There is not a large correlation between trade surplus and broad investment market performance, but trade surplus is a resultant of local and global conditions, and is paramount for small economies like ours in funding the social policies of Government. That includes its own growing cost burden of operation. Trade deficits result in the risk of foreign ownership of growing Government debt, which is never a good thing for small economies.
Our performance of external trade identifies the obvious and critical nature of the current global commodities demand in providing much needed funding for all current policies (whether they are good or bad). The best and worst performance of our trade balance is provided below. There should be few surprises, except where cumulative policy decision of the past have incurred a detrimental response to certain subsectors.
As can be seen, the extreme recent volatility in merchandise trade balance is foreboding in providing a wide projection range of future balances in the near term. -$3Bn Nov2009 to +$4Bn in Jun 2010 is a swing of $7Bn in less than 12 months, which immediately followed a less volatile dip of -$5.5Bn resulting from the GFC. Despite 6 prior years of increasing commodity export, it took until the GFC May2008 to generate trade surpluses sufficient to overcome growing trade deficits.
(edit) During the worst of GFC 1.0 in 2008, monthly export surplus dropped $7.5Bn (or a massive 43% decline!). Corresponding deficits dropped only $5.0Bn (only 33%) resulting in a return to deficit within a 12month period. What's worse is deficits recovered before surplus indicating we are more sensitive to external conditions for our continued prosperity, and more dependent on externally produced goods.
Merchandise Trade Balance closely follows the trend for total Goods and Services Balances (see Part 2, our Balance of Trade)
Optimists will say this is simply recovering to a pre-GFC upwards trend, however these people will be ignorant to the highly cyclic nature inherent to Australia's trade balance. The cyclic volatility provides no assurances in this current climate of global uncertainty, and China has only very recently (since 2007) become a major trade surplus provider for our Balance of Trade (BOT).
(nominal balance, AUD$Million, FOB values)
MERCHANDISE TRADE BALANCE - 1998 to 2011, monthly
ZOOMED UPTREND, TRADE BALANCE - 2006 to 2011, monthly
Breaking this total balance down into composite trade items, reveals the best and worst performing categories. Not surprisingly, our commodities and primary industry provides the lions share (well over 80%) of monthly surplus trade resulting in $17.2.0Bn surplus (monthly, Sep2011); against which $13.5Bn (monthly) is offset in deficit trade categories that are more numerous and less concentrated.
Best 7 Merchandise surplus groups (including combined aluminium, combined copper)
(Top 7 surplus shown accounts for 79.7% of total +$17.2Bn trade surplus Sep2011)
* Gold excludes gold coins, +$171M in Sept 2011
Worst 7 Merchandise deficit groups (including combined motor vehicles, combined petroleum)
(Bottom 7 deficits shown accounts for 36.3% of -$13.6Bn total trade deficit Sep2011)
What is not clear from the charts above, is an answer to the question: Has the results from surplus categories created the corresponding deficit? It is abundantly clear from the above, that without the offsetting surplus due to external demand for our commodities, there would be a severe deficit in response to continued demand for imported goods. This is where Government policy more often ignores the differences in internal and external lead/lag responses to import export data against the background of local demand.
It is clear that our surplus trade is tightly concentrated, while our deficits are much broader being spread over a wider range of merchandise groups. This is not an ideal investment position with enduring market volatility under prevailing economic uncertainty and murmurings of national security tensions. In the absence of alternative sources of surplus, it makes targeting reductions in import costs more difficult to address.
AUSTRALIA MERCHANDISE SUBTOTALS - Surplus versus Deficit against Trade Balance
You can see during the Tech Crash period of 2000 to 2004 that we had record deficits (up to that time) given exports were not suffering at all (by comparison, remained elevated) - yet our lack of discipline combined with prevailing policies of the time resulted in record deficits in 2004. It has taken the resources boom to recover our trade surplus and reduce the accumulated trade deficit to less than -$100Bn (in the red).
Therefore, expect a likewise return to deficit in any continued global weakness that impacts the export of our commodities and primary industries.It stands to reason then that this Government makes hay while the sun shines. I doubt any present (or past) Government has the wherewithall to address the trade imbalance when it next arises, let alone have a plan for it in preparation.
TO BE CONTINUED- PART 2 by Country, by State and Total Trade Balance Trend
Regards,
There is not a large correlation between trade surplus and broad investment market performance, but trade surplus is a resultant of local and global conditions, and is paramount for small economies like ours in funding the social policies of Government. That includes its own growing cost burden of operation. Trade deficits result in the risk of foreign ownership of growing Government debt, which is never a good thing for small economies.
Our performance of external trade identifies the obvious and critical nature of the current global commodities demand in providing much needed funding for all current policies (whether they are good or bad). The best and worst performance of our trade balance is provided below. There should be few surprises, except where cumulative policy decision of the past have incurred a detrimental response to certain subsectors.
As can be seen, the extreme recent volatility in merchandise trade balance is foreboding in providing a wide projection range of future balances in the near term. -$3Bn Nov2009 to +$4Bn in Jun 2010 is a swing of $7Bn in less than 12 months, which immediately followed a less volatile dip of -$5.5Bn resulting from the GFC. Despite 6 prior years of increasing commodity export, it took until the GFC May2008 to generate trade surpluses sufficient to overcome growing trade deficits.
(edit) During the worst of GFC 1.0 in 2008, monthly export surplus dropped $7.5Bn (or a massive 43% decline!). Corresponding deficits dropped only $5.0Bn (only 33%) resulting in a return to deficit within a 12month period. What's worse is deficits recovered before surplus indicating we are more sensitive to external conditions for our continued prosperity, and more dependent on externally produced goods.
Merchandise Trade Balance closely follows the trend for total Goods and Services Balances (see Part 2, our Balance of Trade)
Optimists will say this is simply recovering to a pre-GFC upwards trend, however these people will be ignorant to the highly cyclic nature inherent to Australia's trade balance. The cyclic volatility provides no assurances in this current climate of global uncertainty, and China has only very recently (since 2007) become a major trade surplus provider for our Balance of Trade (BOT).
(nominal balance, AUD$Million, FOB values)
MERCHANDISE TRADE BALANCE - 1998 to 2011, monthly
ZOOMED UPTREND, TRADE BALANCE - 2006 to 2011, monthly
Breaking this total balance down into composite trade items, reveals the best and worst performing categories. Not surprisingly, our commodities and primary industry provides the lions share (well over 80%) of monthly surplus trade resulting in $17.2.0Bn surplus (monthly, Sep2011); against which $13.5Bn (monthly) is offset in deficit trade categories that are more numerous and less concentrated.
Best 7 Merchandise surplus groups (including combined aluminium, combined copper)
(Top 7 surplus shown accounts for 79.7% of total +$17.2Bn trade surplus Sep2011)
* Gold excludes gold coins, +$171M in Sept 2011
Worst 7 Merchandise deficit groups (including combined motor vehicles, combined petroleum)
(Bottom 7 deficits shown accounts for 36.3% of -$13.6Bn total trade deficit Sep2011)
What is not clear from the charts above, is an answer to the question: Has the results from surplus categories created the corresponding deficit? It is abundantly clear from the above, that without the offsetting surplus due to external demand for our commodities, there would be a severe deficit in response to continued demand for imported goods. This is where Government policy more often ignores the differences in internal and external lead/lag responses to import export data against the background of local demand.
It is clear that our surplus trade is tightly concentrated, while our deficits are much broader being spread over a wider range of merchandise groups. This is not an ideal investment position with enduring market volatility under prevailing economic uncertainty and murmurings of national security tensions. In the absence of alternative sources of surplus, it makes targeting reductions in import costs more difficult to address.
AUSTRALIA MERCHANDISE SUBTOTALS - Surplus versus Deficit against Trade Balance
You can see during the Tech Crash period of 2000 to 2004 that we had record deficits (up to that time) given exports were not suffering at all (by comparison, remained elevated) - yet our lack of discipline combined with prevailing policies of the time resulted in record deficits in 2004. It has taken the resources boom to recover our trade surplus and reduce the accumulated trade deficit to less than -$100Bn (in the red).
Therefore, expect a likewise return to deficit in any continued global weakness that impacts the export of our commodities and primary industries.It stands to reason then that this Government makes hay while the sun shines. I doubt any present (or past) Government has the wherewithall to address the trade imbalance when it next arises, let alone have a plan for it in preparation.
TO BE CONTINUED- PART 2 by Country, by State and Total Trade Balance Trend
Regards,
Wednesday, November 16, 2011
COMMENTARY: OFF THE CUFF
THE MUNK DEBATE
Recently I had the pleasure of watching a lengthy debate on the subject of the North American economy. The Munk Debate motion was that “North America faces a Japan-style era of high unemployment and slow growth”. The so called ‘lost decade’ of Japan, that has been now running for 19 years. Perhaps the hosts were being polite, but ostensibly the debate was really about the USA - excluding Mexico and Canada - since the latter 2 countries are nowhere near in bad shape currently, or suffer from different illnesses. A few have since (poorly) reported the debate as being Krugman versus Summers.
In short summary, it was very well debated in spite of any preconceived opinions about the participants, or their own very publically stated economic opinions prior to this debate. Several reviews of the debate that I have read do not capture what to me were the most salient outcomes of the debate -
That a consensual reality of the present showed up enough times during the pro/con discussion was reassuring in itself. They were not blind to the same things every layman around the world can see for themselves, and each brought a separate contribution to why things are not very good for the US now. Of the 4 debaters - Summers was a bulldog - tough but would tire quickly, lacked intelligence behind the bravado; Bremmer was the 1% flag waver, complete with accompanying accents (for emphasis?); Krugman was the quintessential academic economist and Rosenberg the man on the street.
The summary statements most clearly went to Rosenberg, who said with objective simplicity “I just have to look at the yield curves”. Krugman identified the pimple on your nose stalemate that is (like it or not) modern US Congress in moving forwards with meaningful transition. For those not into accepting the data, the rhetorical summaries of Summers and Bremmer promoting more for the 1% as the way out would have been caviar to the 1% palate.
There was no silver bullet answer presented, considering that was not the mandate. But curiously, it reinforced not whether the US faces a Japan style era, but how long the USA will continue to follow conditions ‘very similar’ to the Japan style era. Further reference to the already polarised and ongoing wider debate is required. Par for the course. Tomartoes tomaytoes.
HOARDERS
For many years now, we’ve had the US society of wealth wearing their financial accomplishments as a badge of honour on their chest. Now having more $billionaires (and let’s face it, there are a few $trillionaires out there) and being proud of it is missing the most obvious sign of an insane monetary policy gone bad. I refer to the comparative study of modern baseball greats to the eras of Babe Ruth and DiMaggio. To cut the story very short, the baseball study found the bell curve of the statistical samples of baseball performances from 1930-1950 had changed to those of 1990-2010. The champions of each era were comparatively great in similar measure within the sample group of each era. It showed Babe Ruth was so far to the right of a broader bell curve, that his performance was an obvious singular standout for his era (no genius needed to understand that one).
So there are 2 things that bother me with the US badge wearing flag flying 1%. The wealth bell curve has moved up several exponent orders of magnitude (10 to 1000 fold I’d say). Seriously yay for you, but one very bad sign for the economy. Secondly, the narrowing of the distribution is a sign of the uniformity in approach to how popular it is to (a) be rich in the US, and (b) make sure you hang onto those bragging rights. (a) is not the problem, (b) is.
One other topic not discussed much at all is the hoarding of this magnified wealth – (b) above. Any increase in position within the 1% society brought about by sound strategy, greed, graft or outright criminality allows one to wear a larger badge. But the growth captured is never permitted to fall far from the tree, and furthermore techniques have been refined that this growth is plucked when fully ripe. Being within close proximity to ones wealth does not provide any flexibility to the circulation of this wealth. This is hoarding, and these massive sums of money are not circulating within the broader community in any fashion akin to the days of Henry Ford, or even as lately as Gates/Jobs.
The proof should not be too hard to realise. In a closed box, with a fixed quantity of money at any single point in time, if a larger proportion of this fixed quantity is ‘accumulating’ within a tightly confined (tightly held) space, then the amount available to the remainder is most clearly reduced. This accumulation is due to the badge wearing hoarders, and is not circulating effectively. By not circulating, it is not doing the work of the same $amounts as companies who are reinvesting within themselves, or creating expanding production.
But equally importantly, if more people are making more money (back to the baseball bell curve analogy), it is also a sign that it is much easier to be more wealthy (higher numbers, tighter bell curve) which is actually a sign of bad monetary policy and not good entrepreneurship. The badge wearing 1% say they are good entrepreneurs, I simply say they have it much easier than previous eras (in many regards, not the least being lax regulations and poor enforcement). A loose monetary policy targeted more at undisciplined financial organisations is not clever, nor is it adding to the collective pool of genetic advancement. It is quite the opposite in my view. Looking at the CHF, YEN and Hong Kong lending rates, it’s now gone global viral within the largest sectors of the money market. So suck it up and get used to it. Eat or be eaten in the cannibalistic world that is zero sum.
In response I mention the 2000/2001 IPO spinning and laddering that collapsed the tech bubble, and created the first batch of modern “entrepreneurs”. Seriously? You have not invented much at all to speak of. More accurately you have merely reinvented past US advances by the manner in which you think you have advanced yourself. Entrepreneurs more accurately describes much of the US unemployed. 2000 to 2011 should be known as the rinse and repeat era.
THE OCCUPIERS
My opinion of the Occupy movement has changed since it was first twittered that Anonymous was going to (a) wipe the NYSE off the face of the internet, and (b) was going to Occupy Wall Street. At first I thought it was a futile attempt given the magnitude of resources at the disposal of the targeted organisations. (Future tip: only when the battle fleet is positioned off the coast and within strategic striking range do you first announce war, not before). Then when the occupiers started, the apparent lack of cohesion and stated purpose was seen by many as being just that.
Having the benefit now of almost a month of watching it spread globally, the lack of cohesion within Occupy has actually become a stronger part of the overall message. The financial sector itself most obviously operates without community discipline and similarly utterly lacks cohesion. To the observant eye, a parallel can be drawn in this regard. But the Occupy Movement have not publically stated dot points of cause/reason/objection?
Since all the financial sector ever does is work with large numbers (aka collateral, either in damage mode or gain mode), the Chairman of the War Chest of Disposable $Funds only ever needs to know (a) what it is that money has to buy, and (b) how much money has to be thrown at it. Like any bad plasterer knows, where is the patch, and how much plaster has to be applied. Pandering to the financial (and media) sector with a dot point hit list would only be targeted in order of (a) derision, (b) contempt, (c) ridicule, (d) graft and finally (e)corruption (in many and various non-obvious yet creative forms). In short, say what you want to say so that it can be summarily dismissed.
Recently, William Black has proposed 3 strategic items that would form a nice starting platform from which to build. But don’t expect any to change in how the financial sector operates with complete impunity and without community discipline. The creativity by which the financial sector is permitted to dodge all and any responsibility for its own incompetence is an indictment of how pathetic “advanced” economies have become as a collective.
To the flag waving badge wearing 1%, I salute.
Recently I had the pleasure of watching a lengthy debate on the subject of the North American economy. The Munk Debate motion was that “North America faces a Japan-style era of high unemployment and slow growth”. The so called ‘lost decade’ of Japan, that has been now running for 19 years. Perhaps the hosts were being polite, but ostensibly the debate was really about the USA - excluding Mexico and Canada - since the latter 2 countries are nowhere near in bad shape currently, or suffer from different illnesses. A few have since (poorly) reported the debate as being Krugman versus Summers.
In short summary, it was very well debated in spite of any preconceived opinions about the participants, or their own very publically stated economic opinions prior to this debate. Several reviews of the debate that I have read do not capture what to me were the most salient outcomes of the debate -
- All participants agreed the state of economic affairs within the USA were very dire
- None of the participants agreed on what the solution was, or what solutions were available
- Specifics of the current situation were discussed and agreed, but a solution was (or solutions were) not
- Consensus appeared briefly within the debate questioning how long it might last, the USA has already entered a stagnant period, it is not whether it ‘will’ or ‘is facing’ but more a question of how long it will last
- A conclusion by those ‘for’ was that the USA is already in a Japan style era, since much of the data since 2008 supports this
- A conclusion by those ‘against’ is that negativity becomes self-fulfilling, and hence to think of the positive outcomes
That a consensual reality of the present showed up enough times during the pro/con discussion was reassuring in itself. They were not blind to the same things every layman around the world can see for themselves, and each brought a separate contribution to why things are not very good for the US now. Of the 4 debaters - Summers was a bulldog - tough but would tire quickly, lacked intelligence behind the bravado; Bremmer was the 1% flag waver, complete with accompanying accents (for emphasis?); Krugman was the quintessential academic economist and Rosenberg the man on the street.
The summary statements most clearly went to Rosenberg, who said with objective simplicity “I just have to look at the yield curves”. Krugman identified the pimple on your nose stalemate that is (like it or not) modern US Congress in moving forwards with meaningful transition. For those not into accepting the data, the rhetorical summaries of Summers and Bremmer promoting more for the 1% as the way out would have been caviar to the 1% palate.
There was no silver bullet answer presented, considering that was not the mandate. But curiously, it reinforced not whether the US faces a Japan style era, but how long the USA will continue to follow conditions ‘very similar’ to the Japan style era. Further reference to the already polarised and ongoing wider debate is required. Par for the course. Tomartoes tomaytoes.
HOARDERS
For many years now, we’ve had the US society of wealth wearing their financial accomplishments as a badge of honour on their chest. Now having more $billionaires (and let’s face it, there are a few $trillionaires out there) and being proud of it is missing the most obvious sign of an insane monetary policy gone bad. I refer to the comparative study of modern baseball greats to the eras of Babe Ruth and DiMaggio. To cut the story very short, the baseball study found the bell curve of the statistical samples of baseball performances from 1930-1950 had changed to those of 1990-2010. The champions of each era were comparatively great in similar measure within the sample group of each era. It showed Babe Ruth was so far to the right of a broader bell curve, that his performance was an obvious singular standout for his era (no genius needed to understand that one).
So there are 2 things that bother me with the US badge wearing flag flying 1%. The wealth bell curve has moved up several exponent orders of magnitude (10 to 1000 fold I’d say). Seriously yay for you, but one very bad sign for the economy. Secondly, the narrowing of the distribution is a sign of the uniformity in approach to how popular it is to (a) be rich in the US, and (b) make sure you hang onto those bragging rights. (a) is not the problem, (b) is.
One other topic not discussed much at all is the hoarding of this magnified wealth – (b) above. Any increase in position within the 1% society brought about by sound strategy, greed, graft or outright criminality allows one to wear a larger badge. But the growth captured is never permitted to fall far from the tree, and furthermore techniques have been refined that this growth is plucked when fully ripe. Being within close proximity to ones wealth does not provide any flexibility to the circulation of this wealth. This is hoarding, and these massive sums of money are not circulating within the broader community in any fashion akin to the days of Henry Ford, or even as lately as Gates/Jobs.
The proof should not be too hard to realise. In a closed box, with a fixed quantity of money at any single point in time, if a larger proportion of this fixed quantity is ‘accumulating’ within a tightly confined (tightly held) space, then the amount available to the remainder is most clearly reduced. This accumulation is due to the badge wearing hoarders, and is not circulating effectively. By not circulating, it is not doing the work of the same $amounts as companies who are reinvesting within themselves, or creating expanding production.
But equally importantly, if more people are making more money (back to the baseball bell curve analogy), it is also a sign that it is much easier to be more wealthy (higher numbers, tighter bell curve) which is actually a sign of bad monetary policy and not good entrepreneurship. The badge wearing 1% say they are good entrepreneurs, I simply say they have it much easier than previous eras (in many regards, not the least being lax regulations and poor enforcement). A loose monetary policy targeted more at undisciplined financial organisations is not clever, nor is it adding to the collective pool of genetic advancement. It is quite the opposite in my view. Looking at the CHF, YEN and Hong Kong lending rates, it’s now gone global viral within the largest sectors of the money market. So suck it up and get used to it. Eat or be eaten in the cannibalistic world that is zero sum.
In response I mention the 2000/2001 IPO spinning and laddering that collapsed the tech bubble, and created the first batch of modern “entrepreneurs”. Seriously? You have not invented much at all to speak of. More accurately you have merely reinvented past US advances by the manner in which you think you have advanced yourself. Entrepreneurs more accurately describes much of the US unemployed. 2000 to 2011 should be known as the rinse and repeat era.
THE OCCUPIERS
My opinion of the Occupy movement has changed since it was first twittered that Anonymous was going to (a) wipe the NYSE off the face of the internet, and (b) was going to Occupy Wall Street. At first I thought it was a futile attempt given the magnitude of resources at the disposal of the targeted organisations. (Future tip: only when the battle fleet is positioned off the coast and within strategic striking range do you first announce war, not before). Then when the occupiers started, the apparent lack of cohesion and stated purpose was seen by many as being just that.
Having the benefit now of almost a month of watching it spread globally, the lack of cohesion within Occupy has actually become a stronger part of the overall message. The financial sector itself most obviously operates without community discipline and similarly utterly lacks cohesion. To the observant eye, a parallel can be drawn in this regard. But the Occupy Movement have not publically stated dot points of cause/reason/objection?
Since all the financial sector ever does is work with large numbers (aka collateral, either in damage mode or gain mode), the Chairman of the War Chest of Disposable $Funds only ever needs to know (a) what it is that money has to buy, and (b) how much money has to be thrown at it. Like any bad plasterer knows, where is the patch, and how much plaster has to be applied. Pandering to the financial (and media) sector with a dot point hit list would only be targeted in order of (a) derision, (b) contempt, (c) ridicule, (d) graft and finally (e)corruption (in many and various non-obvious yet creative forms). In short, say what you want to say so that it can be summarily dismissed.
Recently, William Black has proposed 3 strategic items that would form a nice starting platform from which to build. But don’t expect any to change in how the financial sector operates with complete impunity and without community discipline. The creativity by which the financial sector is permitted to dodge all and any responsibility for its own incompetence is an indictment of how pathetic “advanced” economies have become as a collective.
To the flag waving badge wearing 1%, I salute.
Tuesday, October 25, 2011
Newsletter - Weekly Bell Issue 08
Here's an old version of a newsletter I put together weekly for family, friends and close associates. I call it the "Weekly Bell". Comments are welcome. A full service website with extensive charting, Linear and Dynamic analysis incorporating proprietary 'quant' analysis is on the way, time permitting.
PDF: Weekly Bell, Issue 08 18Sept2011
PDF: Weekly Bell, Issue 08 18Sept2011
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