Econobloggers need their crisis back

I think so, dear readers. With the advent of peace and plenty, as we move to the broad sunlit uplands of The Recovery, I fear some of the spice has gone out of the commentary on sites like this one, and its friends. Where people used to read econoblogs to actually understand a crisis that CNN and Fox News soundbites didn’t seem to encompass anymore, as the meltdown recedes into the past there’s now just a dull ennui.  And with that, the econoblogosphere is moving back to where it used to be, which is to cater to a niche, broader than most, but a niche nonetheless, with a circumscribed influence.

The high point of bloggy “power”, we shall probably find in retrospect, was when a number of bloggers were invited to the US Treasury department and fed some by all accounts delicious cookies, as well as being ferociously spun to by the Goldmans guys whose turn it was to be on sabbatical at the Treasury that when it came to financial reform and what had gone wrong in the banking sector they did in fact Get It, whatever It was.

Since then, of course, we have had Obama praise the bonuses to “savvy businessman” Lloyd Blankfein, who as we all know is doing god’s work;  mind-numbingly massive “trading” profits from all the big commercial, investment, commercial investment banks at the same time as accepting government and Fed largesse*; an even more hideous clusterfuck over finance reform than exists over healthcare reform in the US; and this despite none of the proposals under discussion seeming likely to properly change anything worthwhile, other than maybe the Volcker prop trading rule and this last seems fairly dead in the water.

What really rankles this blogger is that the Great Spinozist Republic is being subverted again. Regulatory capture is one thing, the total inability of a political system to make any steps to reform itself when what is wrong is staring at you in the face, is quite another. Political money and public ignorance has corrupted civic decency in the US to such an extent that doing the right thing for the Republic appears quite impossible.

All these things should make econo-bloggers all quiver with righteous anger, which we would communicate to our readers who would then rise up en masse against the legislators captured by Big Banking, and some form of actual reform might even take place.

But something along the chain has broken. Either we have lost interest or, more likely, the world has. To be sure, there are brave souls who carry on the fight. Felix does an admirable job of keeping us up to date with the nuts and bolts of finance reform. Taibbi provides the rhetoric (“vampire squids”, indeed). Calculated Risk and Naked Capitalism carry on doing their thing, as does Zero Hedge in its batshit sawn-off shotgun way. TED gives us the lowdown and I mean low, on what it really means to be a banker (though TED’s next post is just as likely to be about his favourite type of upholstery. Thanks for including us in the list of blogs you read, BTW). There are others, and Abnormal Returns continues to aggregate them. But the rest of us seem to have stopped caring so much. The minutiae of practical policy is much less amusing than making lots of money in financial markets that really, truly appear to be on the mend.

The wider global economy seems to be much better too. Sure, the US seems a bit screwed up still, and unemployment is high, but frankly that’s not where the action is at anymore. Baruch was astonished to read that Gartner is predicting 20% year on year growth in PC units globally. We can talk about overleveraged consumers until we’re blue in the face and we’ll still be wrong. That’s a crapload of PCs, and someone’s buying them. You don’t sell craploads of PCs like that unless there was something going fundamentally right in more places than where things are going fundamentally wrong.

But a better economy just makes people fat and happy, and fat and happy people aren’t likely to be roused by righteous anger. Fat and happy people are not likely to want to change much. Fat and happy people are much more likely to assume the light at the end of the tunnel gives out onto a large outdoor buffet than the next oncoming crisis. Hell, fat and happy people are more likely to do the stuff to bring on the next crisis, to binge, to borrow more, stoke the next bubble wherever that may be and feel pretty smart doing so, just like we did in 2006 and 2007. Reformed Broker Josh captures the new Zeitgeist rather well just today when he lists the things people no longer appear to be interested in e.g. financial reform, unemployment, etc and says

most market participants have instead turned their focus to finding secular growth stories, deep-value high yielders to replace the lack of money market interest and other such assorted baskets to put their eggs in.

Fine with me.  I could use a break from the “news” myself.

I can’t say much better. Josh is saying what lots of us think.

Baruch isn’t really the person to do anything about this himself. He isn’t Spartacus. It was no co-incidence he was not invited to hob-nob at the Treasury; David at Aleph Blog was kind enough to suggest he and some others should be next time, but Baruch would probably have just eaten more of the cookies than was fair and got bored and played Homerun Battle 3D on his new iPhone until it ran out of power, annoying everyone. Baruch is one of those who likes to analyse what Is and try and make money out of it. He is not very interested in, or good at, what Should Be, though is slightly envious of those who have strong opinions in this direction. Less “designing better futures“, more buying the right ones. Even if Baruch had a prediliction to think about policy he doesn’t have time to think about more than what he writes about already; he has a day job, and a very intense one, which soaks up what mental energy he can muster these days.

But buying better futures are not what the best blogs in this space are about (and not what Nick Gogerty’s blog is either). Posts about the latest chart formation in the S&P500 are not memorable. They help no-one. Blogs about how best to trade can be interesting, but remain narrow and mercenary. So in the end are posts about how many iPads Apple will sell, the stock-in-trade of UB recently. Myself and Bento are just not that qualified to do much else and don’t have the time to post as often as we want. But there are other bloggers who are and who can. At its best, the econo-blogosphere can be the last haven of truly independent, non-captured, and crucially, informed, commentary able to affect policy and opinion makers positively. It used to do just that. It may not help in the end but let someone at least try.

Get your game back on, people. Get some fire in the belly again. A crisis is a terrible thing to waste, and it looks like we are on the verge of wasting ours.

* the irony is of course, is that the millions in banker wodge financing the lobbyists is at least partly the hot money doled out by the Fed to banks in that extraordinary money machine called ” quantitative easing”: Fed buys up at full whack the treasuries it issues to banks at a discount, financed by cheap rates set by the Fed itself. Said banks, busting out with Fed-invented cash, or more properly, “trading profits”, refuse to lend it to small businesses like they’re supposed to in the textbooks and support the economy. No, they plow it into awarding themselves big bonuses and, most pricelessly, pay lobbyists to pay off politicians to subvert both good sense and a public opinion which is as viscerally opposed to big banking as it is ignorant and pliant, and make sure the status quo ante crisum is restored. An edifying spectacle.

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30 thoughts on “Econobloggers need their crisis back”

  1. Alas, readers are crisis weary. Click! They want to change the channel to some good news. I find that I am increasingly turning to satire; at this point, righteous indignation seems only to aggrieve. My sense: Anyone who cares even peripherally about reform has decided that it isn’t ever going to happen so why think about it? Better to watch the Oscars.

  2. Sadly, Baruch, you are right. I know compassion fatigue has set in for me. Then again, it doesn’t take much to bring the embers back to life.

    Here’s to more pertinent and less upholstered posts in the future.

  3. Crises come and go but life goes on. Forget this one and move on to the next one. The sad reality is that noone learned his lesson. People are not able to think any more. This civilization is already too big. Alas

  4. I couldn’t agree more. The whole Gretchen Morgenson meme from the weekend was somewhat telling on where the blogosphere is right now. Everyone gets riled up when some mainstream journalist uses credit default swap instead of currency swap. Definitely a dumb move on her part but it doesn’t deserve 20 posts and entire weekend blog-cycle.

    Blogging was an outlet for many. Many people started as they saw the financial crisis building or the mainstream media floundering. As the crisis went and passed I think some have become a bit tired and disenfranchised. The best blogging is of the altruistic variety and the crisis was a huge motivator.

  5. Yes, satire is good, Nancy, and I enjoyed your satirical riff on securitising the Acropolis. Of course a month after you wrote that the FDP in Germany actually suggested a full disposal of the Acropolis, the Marbles, and a couple of islands.

    Sometimes satire ends up looking like cogent analysis.

    Forgive the upholstery crack TED. I enjoy your more introspective posts too. But blow on your embers; free the rage!

    1. Thanks, Baruch. Sometimes the facts are more outlandish than our late night musings. But in defense of the weary, it’s tough to keep the adrenaline pumped for so long especially since the status quo benefits from the return to inertia.

      BTW, do you think the marbles are more likely to end up in Dubai or Newport Beach?

  6. I enjoy the righteous anger of this site and TED. But no mention of Naked Capitalism? Yves Smith does a great job of mixing righteous anger with knowledge – long may she continue to rage.

    1. Agreed, Upholstery. It’s a fairly shocking omission. Rectified forthwith.

      In fact I meant to include her, but somehow didn’t. I write these posts late and eventually just want to go to bed and so I hit PUBLISH, without properly proofreading the thing. Most of the real editing happens after I get home the next day, ie now. And of course, quite uselessly; ie it gets edited after most people have actually read the blogpost.

  7. Blogging Irrelevancy is always a potential problem, one heightened by the business of blogging which [sadly] necessitates that segment of folk often supplying cogent sought-after analysis on-their topic, to stray where they just shouldn’t tread…like Kunstler offering his thoughts on the Israeli-Palestinian conundrum yielding laughably shocking results.

    I believe it is less that the people are “crisis weary” or rediscovering fatness & happiness than there simply are limits to The People’s apparent ability to withstand cognitive dissonance between the imminent end-of-the-world conjured by financial skeptics, and 2nd derivative of the majority of indicators.

  8. from Designing Better Futures. I am not about Futures AKA derivatives. I am interested in structural change to mitigate systemic risk and produce better sustained economic outcomes.

    Specifically the plumbing of finance, Ratings reform, de-concentration of risk and studies of systemic failure via loose coupling. The title of the blog may be a bit misleading.

    1. I understand, Nick, forgive me for taking the name of your blog in vain. In fact I realise you are not in fact writing about derivatives. I assumed the “futures” in your blogtitle are in the sense of “the future”, ie which pertains to all of us, and not about crude oil and pork bellies. That was actually the sense I meant it in, as in I, Baruch, am not very good at normative pronouncements about how we should all improve our common future.

      But I am, ha ha, about buying the right futures (pork bellies, NDX eminis, crude oil etc)!! Geddit?!? Bada bing. Coz I am, like, an investor in my day job.

      OK, it’s much less amusing now that I have had to explain it. Talk about buzzkill. It’s your fault for choosing a catchy blog title.

  9. Felix just mentioned Treasury cookies a moment ago, brought back memories.

    http://twitpic.com/17e6up

    Personally, I think we peaked about the time the $700 billion stimulus package was passed. Though I am not optimistic about the strength of whatever recovery happens, or doesn’t — I have always tried to post along multiple lines, and not be “all crisis, all of the time.”

    Good post.

  10. Nice site, but you sound remarkably like the former Equity Private: Nice prose, fondness for Latin, well-placed profanity, same blogroll hat-tips, same fondness for Literary allusions.

  11. One other reason for the lack of oomph to sort this out, at least in the UK, is that public ire has been diverted by the rumpus over MPs expenses. This story has been running for the best part of a year and although it is not great that MPs have been charging the public for moat-cleaning, the press focus on this has meant that the public can no longer tell the difference between an MP on £65k per year who uses expenses to compensate and bankers who systematically shaft the rest of us in good times & in bad, and then use the banner of “God’s work” to claim some sort of higher purpose for themselves.

    The public view of both groups is now that “they are all the same” and that “they are all in it for themselves” and that nothing can be done about it – a counsel of despair which corrupts public life and commercial life equally.

    Very healthy to see this call to arms. Consider me duly re-raged and re-engaged.

  12. When the US economic crisis seems to be subsiding in the minds of most (in US), there is still plenty to write about:

    * Financial crisis elsewhere and global reform

    * Peak Oil and the coming energy crisis: Will the Kurzweil singularity overcome lack of fossil fuels and overpopulation?

  13. The smoke has been rising for some time now but nobody can spot any flames. The smoke tells you fire is imminent, but months pass and still no combustion. In time, you become used to the grey sky and pungent air. You turn on the TV and announcers tell you there is no smoke, that people’s eyesight and sense of smell, are changing. The sky is clear over the beltway so politicians don’t care one way or the other.

  14. No – I think it is that all of YOU, like most Americans, have short attention spans, didn’t pay enough attention to catch it last time and will likewise miss the signs of the next collapse, and in the end, again like most Americans, as long as you aren’t feeling it it’s OK to go back to business and wait for someone else to fix everything. You never cared that you were being taken for suckers before as long as you got a steady supply of crumbs and you’ll happily go back to being played for suckers and getting your crumbs. This is what you end up with an MTV world.

  15. A wonderful article !!

    From where I sit I see a nation that has been programmed into believing that all is well in the world. Main stream media only touches on the economy anymore, and the mantra from the administration continues to be ‘we’re improving’, ‘don’t worry’, and ‘all is well’.

    It is a sad fact that many people will take what comes from the mouths in Washington as gospel. If the President says it then it must be true. Seldom do we find free thinkers in the media anymore.

    In 2007 when I began writing about the coming bear market (yes, I am one of those boring S&P 500 chart guys) everyone laughed. People have a tendency to only look at here and now, not wanting to believe that the carnival ride might come to an end.

    An endless supply of American Idol, celebrity gossip, and MTV has turned a nation of intelligent people into having only the knowledge that is presented in a 30 second news bite.

    College students are revolting against tutition hikes (I don’t condone the violence however). What will it take for the rest of America to march to Washington and say ‘enough is enough in a peaceful manner? So far bailouts using tax payer funds, the collapse in housing values, nothing has worked. It would seem that the only thing that would get America off the couch is if American Idol and MTV were taken off the air due to budget cuts. How sad to think something like that is what would stir people.

    What have we become ?

  16. I don’t see the econ bloggers using the other tools that draw people into blogs — twitter, etc. And I think that special light — understanding and depth — is what the econ bloggers can provide. I would like to see them focus on growth areas and how we can grow the economy “for real” instead of this reliance on bubbles we’ve had for close to 20 years now. How do we get back to a real economy where finance is used to fund real growth? How do we restructure so money is not the prime focus but true growth is? We seem to have created more money and paper profits but no real wealth for over 20 years. That is the question I think needs to be answered right now.

    1. Many (if not most) econ/finance bloggers are using twitter now (www.twitter.com/Anal_yst you can also see who I follow and how many of them are econ blogger types).

      I’ve written on the subject in several places, http://www.theatlantic.com/Anal_yst, http://www.stonestreetadvisors.com, http://1-2knockout.typepad.com etc and myself and pretty much every smart person I know agrees that credit-fueled consumer spending is NOT the path to sustainable growth. Unfortunately, there is little we can do to enact the cultural paradigm shift to derail the current status-quo that the government and business have spent the past 50+ years supporting.

  17. Hi Baruch, enjoy your blog a lot. Yours truly is a buy side professional just like you. Would like to see you write more about different sectors/industries. I am sure you have knowledge about them as you are running an equity fund. Seems like you have blogged (and very succesfully) about mainly Apple and the handset industry. Thanks.

  18. Not related to this post but Nokia seems to be wasting a lot of R&D and Apple being very efficient with theirs. Nokia spends around $8 Billion in R&D whereas Apple spends only $1.5 Billion. Revenues for both companies are within 10% with Nokia higher. What the hell is happening at Nokia?

  19. Baruch, sorry to clog up your comments section but have you explored the grand ambitions of Apple with regards to the pay TV industry? The decision to not offer Flash on the Ipad could be to encourage viewers to download TV shows from Itunes as opposed to going to the web. Apple is in talks with CBS and others to come up with a best of TV package for $30. Also Apple has long said that Apple TV is a hobby but finally they might do something with that.

    1. Buysider, yes, your comments are not directly related to this post, but let’s not be a stickler about it.

      re AAPL, Nokia et al, actually I make it a point NOT to blog about stocks I am directly involved in. It’s a bit tawdry, possibly ethically questionable, and makes the blog more a tipsheet, less. . . well less whatever it is. I get enough of all that stuff at work.

      I am not responsible for Apple where I work, and so I feel free to comment on it.

      Honestly, though, I am flattered you want to hear my opinions on other industries! What an idea! I know nothing about sectors other than the ones I trade. So I’ll really be doing you and everyone a favour by not taking you up on your request.

  20. As usual , your post shots right into the heart of the problem – people being too comfortable and conformist to demand better, especially when the economic environment has “normalized.”
    I am “forced” to do some retirement planning lately, little money but lots of fun. Well, stating that majority of 50+ are not ready and won’t be capable to continue the lifestyles they are used to, would be an unde-estimation of the related problem. The younger generation will be prepared even less. The point is, there are two or more variables in the equation describing our economic troubles and at least one of those variables are us, each and every one of us not saving enough or planning our future on individual level.

  21. p.s.
    Had a pleasure to see one of those “funky” loans. Originated in 2004, 30 years while the payments in the first 10 year are interest only, with principle payout starting in 2014 an at variable rate. The rough estimate, it will triple given the rate will go up to 6 %. It is estimated that 1/3 of all of the loans in California originated in between 2004 and 07 were of similar nature. Now, those loans are not underwater yet because payments are still low, however their are the ticking bomb because since those properties are underwater, it is impossible to refinance those loans into traditional fixed loans.
    Whoever thinks we are off the hook and are not repeating the Japanese, 20 years of stagnant growth / deflation loop scenario, might be for a huge surprise down the road.

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