Cyreenik Says
This 25 Aug 12 Economist article, Let us in, describes how mobile money services are transforming how money flows in Kenya. "Safaricom has since signed up 15m users, is used by 70% of the adult population and has become central to the economy: around 25% of Kenya’s GNP flows through it."
This is a wonderful example of how new technology can change how we live. The rest of the article describes how it's not changing other areas of Africa and the world as fast because of turf wars involving government regulators.
This 25 Aug 12 Economist Banyan article, Nuclear Profusion: The build-up of nuclear arms in South Asia remains terrifying, reminds me that the US-Pakistan divorce is proceeding on schedule (as I first wrote about last year), and this article points out an interesting wrinkle in that drama. As Pakistan becomes less vital to the US, and loses its billions in US supporting dollars, it is going to have a recession. As the recession deepens it is going to become more and more of an "Afghanistan East" with its own set of feuding factions and warlords. Nuclear Iran is going to look like a sea of tranquility compared to Nuclear Pakistan.
This thought was inspired by a 30 Aug 12 WSJ Heard on the Street article, Getting Less Bang for Fed Bucks by David Reilly. In it Reilly says "In the face of numerous Fed attempts to spur growth, one measure of economic activity, the velocity of money, has continued to fall. This gauge, which measures how often a dollar is turned over in the economy, continues to plumb the lowest levels in more than 50 years."
This slowing of money velocity is closely related to why the Fed pumping has had such anemic results -- those who have money don't want to use it for risky things in these uncertain times. The fact that it's at its lowest level in 50 years says there is some big surprise in the works right now. I haven't heard people worrying about money velocity since the 1970's, but it looks that that time has come around again.
But wait! There's more!
It's also a future threat. When the economy does start to heat up again, money velocity will too. And when that happens the inflation that comes along with that rising velocity will seem as intractable as the current economic doldrums seem to be.
Ouch! We're building a big, hot pot right now, and the jumping-into-the-fire time won't be any more pleasant -- just different.
And if our current-blame-the-other-guy political shrillness doesn't change soon, this is another item that will go on the finger pointing list.
Starting with the Todd Akin tempest about the linkage of rape and conception, the Republican political conversation has gone off into the ozone. He was... not alone! This is apparently a mythology that's been building for quite a while in some circles.
The fact that it is making news now, and many supporters are coming forward, is an indicator that social stress is rising once again in the US. This is not good. Even more than usual, people are thinking with their guts, not their heads. This means witch-hunting season is opening even wider, and it's prime time for a Blunder Chain to start.
I was hoping that as the scariness of the Great Recession moved into history that Americans would get back to using more analytical thinking, more good judgment. But this month's rise in crazy thinking indicates I was being too optimistic. Instead it seems to be time for "2012: Crazy 2".
This surge is showing up as Republican craziness in the media, but it's not restricted to just one political group, or just one social group. This is a rising tide of craziness that's lifting all boats.
Hold on to your hats, folks, the roller coaster is going over tooooppp!! ...again!!! (And here is my theme song for times such as these: Master Jack.)
Update: This 23 Aug 12 NYT opinion page, The Crackpot Caucus by Timothy Egan, is one sided, so double it, and you get a good feel for the extensiveness of the crisis we are facing.
This 9 Aug 12 Heard on the Street article, On IPOs: Beware Picked Lock-ups by Rolfe Winkler, describes the decline in stock prices of several recent social media IPOs. At the beginning of the year I predicted a stock boom fueled by end-of-world mania followed by a bust. And I predicted the icon for this boom-bust cycle would be social media stocks -- by 2014 this would be called the Social Media Bust.
It seems that the social media part of the bust is coming about six months early.
This 7 Aug 12 Reason article, Take me down to the Parasite City by Gene Healy, points out that the Washington, DC district is booming. It's a boom comparable to Silicon Valley and the heart of the boom is defense spending followed up by stimulus spending.
This is not good.
First, there is no positive feedback in defense spending -- investing more in it does not grow the economy faster the way investing in, say, more computing power to streamline business operations does. It is a growth sinkhole. Second, so much of defense spending is unaccountable spending -- it has no bottom line to measure good results from bad results. The over-the-top worst case of this is secret anti-terror spending where the public isn't even allowed to know what the spending is about.
Talk about fertile ground for misspending big time! No wonder lobbyists and lawyers are having a field day -- unaccountability is their bread and butter. Washington's boom compared to the rest of the nation is a tangible sign that government spending is sucking off a huge portion of US investment that would otherwise be spent on positive feedback industries that would grow the economy.
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