Sunday, December 11, 2011

Books, the economy and presidential politics

One of the best parts of any vacation is the time to relax and read some good books.  We have both spent time over the last two weeks reading on airlines, in buses driving across the Pampas, and now in this beautiful little hotel in Cordoba.  A good moment to share my thoughts on reading materials for future reference.  Warning:  Gail says this is too long and no one will read it, so feel free to skip to the end.
I have been deeply involved in litigation resulting from the economic meltdown of 2008.  Many of my clients have had their bank lines cut off or reduced and that led to all kinds of unintended consequences.  I want to understand better what exactly happened, why and how to respond to the various attempts throughout the world to fix the problems.  This has also been an election year in
Argentina (they had their own meltdown in 2000-2005, came out of it with a bang due to the rise in comodity prices, and are now slowly recovering from the 2008 recession that reduced their rate of growth.)  They did reelect their president (it's the economy stupid and the economy here is doing better than most places.) 
So I subscribed to La Nacion (Argentina's daily newspaper) last January and have tried to read a few articles on politics and the economy in Spanish every day all year long.  Good preparation for this trip.  It comes on my Kindle every morning and is inexpensive and enjoyable.
It seems to me that the main difference between our US government overspending and the Argentine version, is that we have the advantage of being able to print lots of our own dollars and other people accept them as if they are real money.  
Few countries in history have had a golden printing press.  Certainly no South American country has ever been given that luxury.  So if they print paper money, other folks just ignore it, or laugh at them and refuse to take the pesos.  If America did not have the Exhorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System by Barry , Eichengreen, we would be defaulting on our bonds right now.  Excellent book.  Buy it.
Now if you really want to be frightened, read Endgame: The End of the Debt SuperCycle and How it Changes Everything, by John Mauldin and Jonathan Tepper.  Or, Currency Wars: The Making of the Next Global Crisis by James Rickards.  These authors know what they are talking about and it does not have a happy ending. Timing is everything, so we may be lucky and have a few more years or decades before the collapse, but when it comes it will be a doosey.
I just finished Churchill by Paul Johnson, and it is a great biography. Before leaving home I read Churchill and Ghandi, and that was also a fine dual biography.  I like Johnson's even better and I really admire Churchill.  He was a great leader, we need someone like him now to get us out of this mess (although he made some major economic blunders during the 1920's that hurt Britian's economy badly for three decades until Margaret Thatcher turned around the socialist ship of state.)
Next, The Party:  The Secret World of China's Communist Rulers by Richard McGregor.  The Chinese economic model has done very well by taking all the earnings from the people and reinvesting it into infrastructure.  That will not last forever and when the people are tired of being abused by their leaders, we will all hear the explosion.
A little business history to put anti trust law into perspective is in The Great A&P and the Struggle for Small Business in America by Marc Levinson. I grew up with an Atlantic & Pacific grocery store in Seattle, most people in America today do not even recognize the brand. It would be like if 40 years from now no one recognized the name WalMart.  Who knew that the Robinson-Patman antitrust law could cause so much destruction, and not even with good economic reasons.  The antitrust law was debased and became a politcal witchhunt.  We would not have WalMart or Costco or Target or BiMart today without the pioneering cost saving work of the Hartford family.  They created the Atlantic & Pacific Tea Company which grew into the biggest grocery chain in the world, thousands of outlets, and saved the average American family ten percent every year on their food budget.  What did the Congress give them in return?  Prosecution (and conviction) and persecution for decades.  Why?  Because the populist congress, led by Wright Patman an ambitious small town Texas congressman and state legislatures wanted to save the little guy, protect the small grocer from competition.  This is beginning to sound like a theme, eg big is bad, soak the corporations, break up Microsoft and the banks, raise the taxes on millionaires and billionaires, etc, etc, etc.  The more things change, the more they remain the same.  So you better read and understand history or we will make the same stupid political decisions that got us into the soup.
  The Big Short: Inside the Doomsday Machine by Michael Lewis is excellent and tells the secrets of the Wall Street bankers who thought 64-1 leverage with other peoples money was a good idea.  Argentina 2001-2009:  From the financial crisis to the Present by Rosanna Zaza, is a Kindle booklet that has solid data.    When Money Dies by Adam Fergusson traces the disaster of hyperinflation in Germany in the 1920's and the consequences.  Paris 1919:  Six Months That Changed the World by Margaret Macmillan, gives us the historical background for the German hyperinflation. 
  There are more books I could list, but you get the idea that things tend to repeat themselves. Economic cycles, populist movements, religious revivals, materialism, antimaterialism, socialism, antisocialism, colonialism, anti colonialism, dictators in Latin Amereica followed by dictators in Latin America,  the ebb and flow and ebb of human rights in China, and in the Arab world, and the need for freedom of speech and assembly in Moscow and Boston (the NYTimes yesterday had photos of police manhandling anti Putin protestors in Moscow and police clearing out the Occupy protesters in Boston...irony anyone) and so goes the human parade. 
There was a great parade here last night, we watched them march through the streets of Cordoba, cheering the fact that today, their Presidenta was sworn in for another four year term in office.  The demonstrators were carrying banners with photos of Evita, their last heroine and compare her to the new new thing Christina.  I watched the live speech the Presidenta made (how could I miss it, it was carried on 10 different channels live and with repeats on the news on all the other channels later).  Her one great applause line brought a standing ovation in the Congress with ten minutes of cheering and pounding and joy; the cameras panned out to the Plaza de Mayo in front of the Casa Rosada as the thousands of flag waving Peronista supporters cheered her promise.  Let me try to quote her:
"Yo NO soy la Presidenta de los corporaciones, yo soy la Presidenta de la Nacion, de los Argentinos..."  She actually sneerer when she said the word "corporaciones."
She promised to fight against the corporations, against the International Monetary Fund, against the bankers, and against Wall Street and for the people of Argentina. She promised more money and benefits for the people, economic development and jobs, jobs, jobs.  and the people cheered.  I do not think the people who invested in Argentina sovereign debt bonds will ever get paid back.
It felt like I have seen this movie before.  And we will see it again.  And meanwhile the dollar will depreciate and the cost of living will increase and people without a good education will play video games and not study hard and ask for a free lunch and the world will look for a savior. 
There is none except Him who was born in a manger.   We did go to church last night at the Church of the Good Shepard,the priest was a kindly old man with a strong voice and the beautiful old gothic church was crowded with sincere people who greeted one another with the Peace of Christ and are looking forward to a somewhat different happy ending.  Enjoy reading and also spend some time praying for the future of our world. 

1 comment:

Jan said...

I read this all the way through and am glad I did. Thanks for sharing the titles and your thoughts.