The blog is taking a break for a few weeks while we travel to places with poor Internet connections (yes Virginia they do exist!).
But before we go a few odds and sods
Never trust the conventional wisdom or PR shorthand for market trends
At the start or 2012 the markets were full of doom and gloom. Analysts and pundits listed all the problems – from the debt cliff to Europe – which would ruin us all. The outcome, despite the predictions, was that markets achieved their best performance since before the Great Recession. Now, one year on the analysts are talking about the ‘great rotation’ from bonds etc etc etc to equities as investors will shift their investment behaviour.
The striking thing is that this is not really based on analysis but on a great PR frame. Just as we have heard, ‘this time it’s different’, about the time bubbles are about to burst too many times for many of us to wish to remember (the author started his career during the Poseidon boom) now we are seeing another bit of shorthand framing – ‘the great rotation’. If Galbraith’s dictum is right about the conventional wisdom always being wrong then the outlook for the Year of the Snake will be less financially beneficial than either Chinese astrologers or market analysts are suggesting. Joseph Kennedy once said that the time to sell stocks was when lift boys started giving stock market tips. My version of this is: the time to sell is when PR consultants tell you about the growth opportunities in investor relations and journalists start channelling the market bulls.
We look for spin in the news and political pages – but the spin there is never as endemic nor as pervasive as it is in the business pages.
It’s so easy
Surprise, surprise! The next German election is probably going to be held on September 22 – the date the German Basic Law dictates with a bit of latitude for being later or earlier. The next Victorian State election will be held on November 29 2014 as the Premier, Ted Baillieu, wryly told journalists asking his opinion on Julia Gillard’s election date announcement. And John Key, the NZ PM, announced their last election date months in advance. Admittedly this election was after the World Cup and (fortunately the All Blacks won after a few frights from the French) there was a risk in this as New Zealand often goes into a profound mourning which even impacts on GNP when the All Blacks lose. In this context was Julia Gillard’s announcement worth all the analysis it received?
The anti-alcohol lobby
While I don’t write for crikey anymore I still read it. Recently the online news magazine’s Canberra correspondent, Bernard Keane, has been undermining the anti-alcohol lobby with some evidence-based reporting. The anti-alcohol lobby relies on the gullibility of reporters who can always be relied on to regurgitate the lobby’s claims about alcohol consumption and the terrible risks the country is facing because we don’t follow the lobby’s policy prescriptions of increased taxes, limits on availability, stringent controls on liquor licensing and everything else H.L.Mencken warned us wowsers wanted to protect us from. All of the claims, of course, supported by claims of financial costs which approach the magnitude of the financial benefits industry economic consultants solemnly tell us developments will bring.
If all the health risks health lobbies warn us of came to pass then, statistically, we would all be dead and the nation bankrupt. If all the benefits industry economist promise were real the Australian economy would be four (or more) times larger than it is. See www.crikey.com.au and search for Bernard Keane and alcohol to see some evidence on this subject.
Currency wars
On the subject of analysis John Authers, The Financial Times columnist (2/3 February 2013), cut through the portentous commentary on currency manipulations with the following: “Why do countries such as China and the US manipulate their exchange rate? The answer is simple. Because they can. And why do other countries shout about ‘currency wars’ and complain bitterly about the manipulation? Because they cannot.”
The Gatekeepers
Among the Oscar nominations you may not have heard of is The Gatekeepers which is a documentary focussed on six former chiefs of Israel’s domestic intelligence service Shin Bet. Not sure when, or if, it will be released in Australia but the trailer can be seen at www.youtube.com/watch?v=7SWg65dqKNY. In the meantime read (again the FT) Simon Kuper’s column (2/3 February 2012) – Israel: between hope and fear.