The World Of Mr. Jones
Something's happening here
Links are at the end, awaiting your pleasure.
Eggs are $8.99 the dozen at the local supermarket. They’re considerably cheaper at Whole Foods, one assumes because the eggs there aren’t from the factory farm hens with avian flu getting slaughtered in their tens of millions.
“America Is Canned Fruit On Rye,” by David Brooks
Brooks, writing in The Atlantic, thinks the nattering nabobs of negativism have people convinced the country is in trouble despite that most are reasonably satisfied in their personal lives.1
Yes, he says, we have our problems, inequality and catastrophic climate change and vengeful women-hating Birchers on steroids and the like, but we are chock full of talent and the tumult is but an opportunity.
The piece is very Tom Friedman-like, focusing for the most part on increases in productivity, increases in the number of people with college degrees (no mention of college debt), increases in entrepreneurial enterprises, increases in foreign investment (mostly in right-to-work states), increases in venture capital investments in startups, and the promise of advances in artificial intelligence.
One can visualize Friedman reading the piece and exclaiming, “that thieving motherfucker!” Try it: picture the Mustache of Wisdom alone in his study in his echoing mansion, leaning forward and cursing Brooks, maybe threatening to take a steamroller to him, maybe writing a new column, to later be expanded into a book: David Brooks is Flat. 750 words on the intellectual vacuity of Brooks—stick a pin in him and listen to the hiss of other people’s ideas leaking out.
Tyler Cowen’s idea, in this instance, but it could have been any among hundreds, or more. Anyway everything is fine, if one adopts a certain definition of “fine.”
BlackRock says we’re all in the funhouse now
BlackRock is the Brobdingnag of asset management firms, throwing around about $9 trillion in client funds. The firm’s analysts don’t think everything is fine even in the narrow Brooksian sense.2 They think stormy times are upon us for good, or for as far ahead as they can see anyway.
They could be wrong, of course; everybody could avoid the new economic shoals and rogue waves out there on the ocean of finance, or those things could be imaginary. But they're adamant about their projections and the new investment strategies they're adopting to navigate a new, unstable normal. They think BlackRock will be fine, and the people, organizations and institutions investing specifically through BlackRock will be fine, but even at their size that’s not a lot of people.
A key feature of the new regime, we believe, is that we are in a world shaped by supply that involves brutal trade-offs. This regime is playing out and not going away, in our view.
Repeated inflation surprises have sent bond yields soaring, crushing equities and fixed income. Such volatility stands in sharp contrast to the Great Moderation, 40 years of steady growth and inflation. Production constraints are driving this new regime: The pandemic shift in consumer spending from services to goods caused shortages and bottlenecks. Aging populations led to worker shortages. This means DMs can’t produce as much as before without creating inflation pressure. That’s why inflation is so high now, even though activity is below its pre-Covid trend.
Central bank policy rates are not the tool to resolve production constraints; they can only influence demand in their economies. That leaves them with a brutal trade-off. Either get inflation back to 2% targets by crushing demand down to what the economy can comfortably produce now (dotted green line in the chart), or live with more inflation.
For now, they’re all in on the first option. So recession is foretold. Signs of a slowdown are emerging. But as the damage becomes real, we believe they’ll stop their hikes even though inflation won’t be on track to get all the way down to 2%.
We’re not experts on financial perspectives, but “brutal trade-offs” showing up twice in three paragraphs of a sober investment strategy analysis seems ominous.
(“DMs” here are “developed markets,” not “Dungeon Masters,” more’s the pity.)
BlackRock don’t address corporate profiteering as an inflationary factor, although they’re certainly aware of it; if they did address it, they’d be outlining how they intend to profit from it. Maybe it’s too obvious to worry about.
In any event the analysts are convinced that the firm will continue making a lot of money for their clients, not least by anticipating and taking advantage of predictable supply and demand imbalances such as, for instance, imbalances in the supply of and demand for clean energy.
We track the transition to net-zero carbon emissions like we track any other driver of investment risks and opportunities, such as monetary policy. We take a view on how it is likely to play out, not how it should play out. We assess its implications for financial risks and returns.
Our research suggests the global transition could accelerate, boosted by significant climate policy action, by technological progress reducing the cost of renewable energy and by shifting societal preferences as physical damage from climate change –and its costs –become more evident.
. . .
The faster the transition, the more out of sync the handoff [from fossil fuels to clean energy] could be meaning more volatile inflation and economic activity.
You can see some of what BlackRock describe happening in real time. The Fed, for instance, and their reporter remoras, were confident most of last year in their ability to hammer workers and reduce inflation by slowing the economy and increasing unemployment. They’re now coming to realize that they can’t manipulate employment and inflation as they’ve done in the past without, as the BlackRock futurists say, crushing the economy; that’s reflected in the contemporaneous press coverage too.
Squint a bit and you can also see some promise in their forecasts, as with the possibility of more aggressive climate change policies. In that regard they mention the impact that money from the Inflation Reduction Act should have (so long as the government meets oil and gas development targets, which goes unmentioned.) But as they say, they don’t have a dog in that hunt—they’ll make money no matter how it goes.
That’s the big difference between Brooks and BlackRock: Brooks says the country has always been fucked up and our travails have always spurred innovation and progress; BlackRock make no qualitative social judgements at all, because they don’t expect that they or their clients will be affected one way or the other if they do their job right.
But in both instances, most people are just kindling. Brooks sees a social good, for instance, in people living and consuming longer, assuming we ever get back to that trend, while BlackRock see people living longer as a recession-proof healthcare investment opportunity.
This can all go on until it can’t, when one day you wake up and eggs are just fucking unaffordable, or maybe eggs are and air conditioning isn’t, so you can fry up the eggs without a stove. You can take a look at the BlackRock year-to-come for guidance as to which is more likely.
Ah well. Come the revolution.
Republican legislators (and Henry Cuellar) have issues
According to the website Ballotpedia, there have been 53 abortion-related ballot measures in 24 states since 1970. Of the 43 questions supported or placed by anti-abortion groups or legislators, voters approved 26% and rejected 74%. Of the 10 questions supported by abortion-rights backers, voters approved 70% and rejected 30%.3
Harper’s ran a long piece late last year by Charlotte Shane, "The Right To Not Be Pregnant.”4
The right to not be pregnant ought to be at the core of reproductive freedom, yet the United States has never legally recognized this right, and no mass movement of its citizens has ever expressly demanded it. Though Roe v. Wade has long been regarded as a feminist gold standard, it did not establish an individual’s unconditional right to end their pregnancy. The ruling granted that the decision to abort was protected by the right to privacy implicit in the Constitution, but it placed that decision explicitly in the hands of doctors. In the words of Justice Harry Blackmun, in the majority opinion, abortion is “inherently, and primarily, a medical decision,” and therefore the “basic responsibility” for its use “must rest with the physician.” The procedure was thus under the purview of a credentialed, impartial authority, referred to in the common masculine possessive: “The attending physician, in consultation with his patient, is free to determine, without regulation by the State, that, in his medical judgment, the patient’s pregnancy should be terminated.” The idea that a “woman’s right [to abortion] is absolute” was deemed “unpersuasive” and directly rejected. In closing, Blackmun affirmed the rights of the state—declaring that it maintained the right to regulate “potential life”—and reaffirmed those of the physician. The government held on to the master keys and lent a pair to the medical establishment.
We can’t require you to read it but it should be required reading particularly for the “safe, legal and rare” crowd.
Lots and lots of music by which to have written
Don’t know if it shows, but this thing took a long time.
Peaness, “World Full Of Worry;”5 The Big Moon, “Here Is Everything;”6 Shame, “Songs of Praise;”7 Du Blonde, "Homecoming;"8 Mattiel, "Georgia Gothic;"9 The Pale Blue Eyes, "Souvenirs;"10 The Mysterines, “Reeling;”11 The Lovely Eggs, "I Am Moron."12
And that, Comrades, is all we got
Take care, be well, consider subscribing if you’ve not already, and share the newsletter around if you like it.
It shows. Lovely piece, Weldon, with a tone of resignation, humor and references that highlight the absurdity of it all, and which make the bad news more palatable for consideration.