Why is everything the Wrong Way Round?
“We’re playing all the right notes Sunshine…”
The Slog: Yesterday, ThomsonReuters noted that, of the 116 second-quarter earnings pre-announcements given by S&P 500 companies, 93 of them have been negative, while only 14 have been positive. For those of you like George Osborne and Geli Merkel who find real numbers just too boring dahling, that’s a 6.6 negative to positive ratio – the worst in nearly twelve years.
But the stock markets are up, up and away….burn baby, burn! The Bank of Japan has revised its economic outlook up, up and away….second stage boosters, we are go for orbit! The US was on tilt, but now S&P says it’s stable……we have a moonlaunch window Houston! And in Britain, the Royal Institute of Chartered Surveyors says the housing price index increased to 5 from 1 in April….moonboosters fired, we’re off to the Moon – waydergo!As you’ve almost certainly noticed by now, things are no longer tits up in the world of econo-financial eternal growth, they’re more just the wrong way up.
You know, like – upside down, on their heads, not the right way up. But definitely not tits up, oh no: we’re in the ongoing pert mammories space going forward.
And what are these upside down things? I mean, why can’t the new paradigm be upside down? Upside down is the new grounded, maybe?
Well, not everyone in Asia is buying a London penthouse. In India, the economy is going the wrong way: the slowest economic expansion in a decade has started the government onto that old interest-rate cuts soft-shoe shuffle, as a result of which the rupee has fallen 7%. Given India is still heavily dependent on imports, the rupee too is going the wrong way.
In fact, Asian stocks overall fell, and the Yen strengthened, following ‘disappointment’ at the Bank of Japan holding back from being completely insane, as opposed to the balance of its mind being somewhat disturbed. The BoJ chucks a Tsunami of tax-confetti at the economy, and the markets are ‘disappointed’. So disappointed in fact, that the Yen went the wrong way. Which is where it was going under Tokyo’s QE banzai, except this new move is the wrong kind of wrong way, on account of the folks for whom the BoJ is pulling this stunt just sabotaged their own manipulation. Look, it’s not that difficult, FFS try to keep up here.
As for that S&P thing regarding the US, I’m wondering whether static rather than negative means better, or just that the patient’s dead. You see, the S&P revision isn’t based on growth in the economy, because that’s going the wrong way. It’s a little tough at first to see WTF it is based on, but after due diligence I think I can sum this up as a triumph for incompetence. That’s to say, the US tax income went up because very, very rich Americans took profits on investments sooner than they might otherwise have done – they having been uncertain over whether tax rates on capital gains might rise if no debt ceiling agreement were to be reached. So that’s all good. And furthermore, incredibly draconian ‘automatic spending cuts’ were lined up to be so severe that the politicians would be forced to reach an agreement on a budget to avoid them. But the authorities woefully underestimated the Congressman IQ aggregate, so the cuts did go into effect on March 1….meaning the Government spent less. And that’s why the USA is now in stable mode at Standard & Poors, and possibly why elephants have trunks too.
Everything else in the Republic is going the wrong way: the U.S. debt-to-GDP gap is widening, the long-term jobless numbers keep getting worse, and although 178,000 new jobs were added in the private sector during May, the U.S. unemployment rate increased to 7.6%.
And so to Blighty, where the housing market has recovered, or so suggests the RICS. Not really: they were just kidding. It was a survey of surveyors (sounds like fun) who said they thought it was recovering. Just about all the growth is being driven by foreigners buying up London, and the small amount left over is the result of George Osborne’s interesting decision to spend some of his spending cuts on inflating house prices. Thus, according to the Office for National Statistics (ONS), the UK housing market is seeing a slight pick-up in activity.
Sadly, there’s a reason for this too. The rise compared with a year ago was the result of a sharp drop in house buying in April 2012 – when the first time buyer stamp duty concession was dropped. To save money. So Mr Osborne could then take the money he’d saved and oh never mind, it’s not that important. The big thing to note about the UK is that yes, you guessed it, everything else is going the wrong way. The number of people out of work increased in 2013 Q1, as the jobless rate rose to 7.8%. We have the lowest rate of growth since 2009, and a continuing fall-off in the volumes exported to the EU. The dear old Daily Express Gawd bless ‘er headlined three days ago that ‘Sales of British goods to the world’s fast-growing countries outside the EU rocketed’, but unfortunately that contention was inaccurate in every way: in April non-EU sales actually fell, while imports from outside la-la-Land continue to be much higher than our export levels. Meanwhile, the deficit is stuck at around £170bn, and so not surprisingly the National Debt continues to grow….which is, as you know, the wrong way:
|FY 2013*||£1.16 trillion|
|FY 2012*||£1.04 trillion|
|FY 2011||£0.91 trillion|
|FY 2010||£0.76 trillion|
|FY 2009||£0.62 trillion|
|FY 2008||£0.53 trillion|
Under the rules (if I can call them that) of Zen Buddhism, you can change the outcome of any activity by thinking: in Zen archery, you have no arrow in the bow. So the arrow lands where you think it would’ve done. Under the rules of Zen Globalism, you pretend you have a bazooka, and although the money you fire from it is non-existent, it still has the effect you wanted it to have.
The signs are that the Way of Zen is the Wrong Way when it comes to economics. The signs are that when econo-fiscal behaviour is Upside Down, things are not being done the Right Way. What seems likely is that if things continue in This Way, everything will go Their Way and nothing will come Our Way. To which my reaction is “No Way”. Ba-boom.