Why did We wind up here?

I provide this information solely to describe what Dreams are made of, much self-delusion and Attention drawn only to variables which are the most volatile. I ask myself How people can find Joy in shrinking Stockpiles, a decrease in Oil prices, and running only a $26 Billion Trade Deficit. Oil is going to go up in Price if the economy improves, shrinking Stockpiles means less Choice and Retail assistance for Consumers, and We are still selling off Our productive assets simply to get funding to Consume. Improved economic performance will only mean that the Trade Deficit will again experience rapid growth. Most Economists stipulate that you must watch Trade over at least two Quarters, while I would mention you will not see anything surprising within 8 Quarters.

You can find the Chinese pulse with Concern for Exports. The major distraction in declining Exports for China is corporate reduction of Investment. The article does not truly mention what degree this is foreign investment in the Country, but I expect it is almost wholly responsible for the decline. Opportunity for Investment is still too large in China for native Companies to be swayed by Events in the West. The Chinese Consumer still has Need for far too many things, and a high Savings Account to pay for the expenditure. China’s real problem with Trade is their dependence on Imported Oil. The current Price of Oil makes that dependence acceptable, but will present huge friction to Growth if the Oil returns to recent Pricing; especially if Exports stay low.

Paul Krugman poses a real Question today, asking if We again must force Banking and Finance to conform to regulatory rules. His basic contention remain that We must, with which I would tend to agree. A fundamental Question must be asked though, which is What is the true worth of finance? Specifically, should it receive one-third of the corporate profits of the economy, when its role is only as a facilitator of funding, not productive in any other sense? I remember the English Joke about American Servicemen: ‘They are Oversexed, Overpaid, and Over Here!’ You might have to be a WWII Historian to understand that One, but Everyone can understand the Concept of Banker Rock Star. People who only take Risks with other peoples’ money could be expressing vast hubris in the Demand for high Bonuses. They are only Individuals, Businesses, and an economic sector–and not even very often Right! Bernanke, Geithner, and Company should not think they possess a bloody pulpit, and I await their Demand for Speaking fees to appear before Congress. lgl