The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Economists from the Left and the Right Agree: Neither the U.S. Nor Europe Is Dealing With the Real Problem: Today, economists from both sides of the political spectrum said that no one in the U.S. or Europe are dealing with the real problems.

Niall Ferguson told Bloomberg that no one has the political will to deal with Greece, and so Europe might experience a crisis as big as the 2008 crash in the U.S.:

Paul Krugman argues that austerity has failed in Europe, but that the European Central Bank ” “i[s] just not willing to face up to the failure of its fantasies” and to restructure Greek debt. (In more Europe news, Moody’s will issue a big credit warning on 14 of the UK’s 18 biggest banks tomorrow).

And in the U.S., former Reagan head of the Office of Management and Budget – David Stockman – says that both Democrats and Republicans are now advocating for default in America, since Democrats won’t compromise on spending and Republicans won’t compromise on taxes. (Before Dems label Stockman as a radical anti-taxer, remember that he recently said that the Bush tax cuts were “the biggest fiscal mistake in history”, and that extending them won’t stimulate the economy)

Video after the jump

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What a difference a trading day makes.   As of Friday’s close only seven of the fourteen major global indices that we track were below their 50-day moving averages.  As of today, they all are.  The S&P500,  Dow (just barely),  Nasdaq,  all three European, and the Korean Kospi broke their 50-days.   The Hang Seng and Shanghai fell sharply to close below their 200-day moving averages.

The entire internet is making us dumber.

That’s a meme is making its way around the internet. Its partially true, in that the meme itself will make you dumber. The internet, on the other hand, will not.

Via Bill Keller of the NYT, the latest version of parents hating their kids music is this rather simplistic take on technology. Keller’s column, The Twitter Trap, should have been titled “As Dumb Or Lazy As You Choose to Be” (except that scored too poorly with the SEO consultants). I wanted to avoid discussing The Twitter Trap until pal Doug Kass mentioned it in his column today.

Ugh.

No, we are not outsourcing our brains to the cloud. That’s the rosy glow of nostalgia, which is so powerful it can make even horrid little things like slide rules seem attractive in retrospect.

So let’s cut to the chase: Anyone can take any technology and abuse it to the point of foolishness. If you rely on anecdotes involving your own kid, you can find proof of anything.

• Gutenberg’s Printing Press threatened existing political power structures and religious authorities; That was why it was scandalous. Not because we no longer had to rely on memorizing huge amounts of information. (Apparently, a massive increase in literacy and bringing books to the masses is to be ignored);

• What do I lose now by not having to waste vast amounts of time with empty, brainless, non-thinking, learn-by-rote memorization? I now have time to spend on critical thinking and analytical reasoning. Who believes that was a bad trade off?

• No more Slide Rules? You mean ANYONE can now use a calculator to do math (instead of only a select few?)

• And did the Pocket Calculator really “reduce a generation’s math skills?” I thought Calculators meant that fast, accurate, reliable mathematics were available to everyone.

• Wasn’t Recorded Music going to kill live music . . . ?

• “The Typewriter killed penmanship.” Sure it did — but it allowed for legible words to be put on paper quickly;

• Has Television “muffled creativity, discourse and interaction?” I thought TV brought entertainment to millions of people at affordable prices. It democratized entertainment versus theater and film.

• Does having a GPS really impair our sense of direction — or does it helps millions of people get to their destination, allow visitors to go where they might not otherwise attempt, and allow delivery people to find where they are going safely?

• Who really believes “Texting diminished our language skills and our vocabulary?” I find Texting teaches brevity and focus.

• Are our Memory Capacities actually being weakened by Google? I have enough memory to 1) ask for empirical evidence of that; 2) Remind you that Google has allowed us to access and learn far more than we might have forgotten;

• Does the “ephemeral nature of Social Media, like Facebook and Twitter, creates stunted relationships and has damaged our attention span?” I now that Facebook creates “ephemeral” relationships with people I would otherwise have had no relationship with. Is that preferable?

And so on.

It seems every new technology that has ever been  developed has come with wildly over-hyped, madly inaccurate forecasts by the prior generation.

From The Economist:

“THE fear that Greece’s sovereign-debt crisis might presage similar episodes elsewhere in the euro zone has been borne out. In November, Ireland joined Greece in intensive care, becoming the first euro-zone country to apply for funds from the rescue scheme agreed in May 2010 in concert with the IMF. Sovereign-bond spreads (the extra interest compared with bonds issued by Germany, the safest credit) have risen sharply in other euro-zone countries, notably Portugal, but also in Spain. “

Source:
(The Economist)

William Fleckenstein, president of Fleckenstein Capital Inc., discusses the outlook for technology stocks and his investment strategy. He talks with Betty Liu, Dominic Chu and Jon Erlichman on Bloomberg Television’s “In the Loop.”

May 23 (Bloomberg)

These cool posters below come from the San Francisco Fed archive, courtesy of NY Fed’s blog Liberty Street Economics.

Over the years, the Federal Reserve System has used many methods to communicate about the role it plays in support of stable prices, full employment, and financial stability. Current communication tools include the new press conferences by the Chairman, speeches by Bank presidents, public websites, economic education programs, local outreach efforts, publications, and blogs like this one.

Back when the Fed was new, and the nation’s economy was plagued by a growing number of bank failures, the posters below were supposed to convey a sense of strength and stability.

More posters after the jump

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In light of today’s sell off, I thought it might be worthwhile to look at how various sectors have been performing since QE2 began (all charts courtesy of The Chart Store)

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click for larger charts

Lots of interesting reading to start the week:

• Once bullish, contrarian Jim Grant likes cash now (Aleph Blog)
• In defence of the Shiller p/e (The Economist)
• Yes, This Is Called the Dismal Science. Why Do You Ask? (Delong)
• Caroline Baum: Both Parties Wrong on Tax Breaks for Big Oil (Bloomberg)
• China hit by worst energy crisis in years as drought compounds chronic power shortages (Washington Post)
• Agreeing on Groupon (HBR)
• The Wave-Maker (Vanity Fair)
• How spam works, from end to end (BoingBoing)
• Fantasy Island – Are Republicans losing their grip on reality? (Slate)
• How our bits shape us: James Gleick’s “The Information” (Nieman Lab)

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