Cab Thoughts 4/21/12

There are some remarkable ways of looking at the markets but recently a fascinating old/new one emerged: The notion of seven fat years, seven lean ones. The magic number in this analysis is 17. Every seventeen year cycle. Everything but a Pharaoh. 

Two aspects of the American presidential race. First is Santorum. How can one explain his success? His original poll numbers showed 2% of support among Republicans and yet he managed to become a national figure. This, a man who dropped out because he was running low on money but, more, because he had to run next in his own state and knew he would do terribly. How could he have done that? How could a relatively unknown and not terribly attractive guy become a significant competitor against a serious and accomplished guy like Romney? The answer is more a comment on the voter than the candidate. Second is Obama. The Republicans, whatever their merits, tore themselves to pieces in this primary yet the polls are astonishing; Obama and Romney  are virtually tied. How is that possible? A sitting president--admittedly a popular guy--is running neck and neck with a guy limping out of a cruel primary. Obama may be more vulnerable than originally thought.

 Hockey is really exciting, even if I forget the HD.

Thinking of Wendell Berry, he turns a cliche around. It is generally believed that mining any one thing is bad for the miner. He contracts his world, excluding aspects of equal--or greater--importance. So a man devoted to academics might sacrifice his productive life, an entrepreneur might devote his life to his business at the expense of his family. A sports enthusiast might sacrifice his intellectual world.
But Berry suggests something else, as well. He says that focused work might endanger the object of his affections.

According to The Philadelphia Inquire, Delta's fuel costs have jumped from 13% of its total costs in 2000 to 36% in 2011. Huge overhead and not getting lower.

The line about Romney's wife never having worked is curious, not for it content but for the apology. The Left has no regard for women who pursue life as a mother or home maker. Simone de Beauvoir, one of the Left's darlings, said, "No woman should be authorized to stay at home and raise her children. Women should not have that choice, precisely because if there is such a choice, too many women will make that one." The statement is filled with conflict. What, as Freud asked, do women want and should society trump their desires? What work is it in life that men find so rewarding? Is there some sort of androgynous mind or do women just meekly follow men into the workplace? Or is this only another individual surrender to the collectivist good? Regardless, the Left has never cared about the happiness of women individually, only in the greater social context.

A thumbnail sketch of current economic thought:
There are three competing views of how to manage economic decline yet all three views admit to the same cause: Insufficiency of aggregate demand. (spending). The three solutions?
a.) Keynes: the government should borrow money and spend it when the private sector will not.
b.) Freidman: The Fed should stimulate the money supply.
c.) Fisher: The decrease in aggregate demand is the result of indebtedness. Debt buildup must be stopped before the problem occurs.
        There are some corollaries. Minsky said to keep banks small so that their errors can be minimized. Kindelberger said further that the Fed should not interfere with a small problem (like the failure of a small bank) as it encourages speculators who might make the problem larger.
These competing theories imply that we have some options if "a" or "b" are correct but if "c" is correct, the solution has sailed.

DOW now makes a solar shingle; "it's not on the roof, it is the roof."


Analogies between The United States and Rome have become so cliched as to be meaningless. More, Rome and America are not much alike aside from level of success. But here is an interesting selection from the Durants' "The Lessons of History". It is the Diocletian section often quoted because of the effect, even then, of wage and price controls. But there is a lot more, even in these two paragraphs, especially the "serfdom" line, the "war economy", and the notion of "collective liberty."
"Rome had its socialist interlude under Diocletian. Faced with increasing poverty and restlessness among the masses, and with the imminent danger of barbarian invasion, he issued in A.D. 301 an edictum de pretiis, which denounced monopolists for keeping goods from the market to raise prices, and set maximum prices and wages for all important articles and services. Extensive public works were undertaken to put the unemployed to work, and food was distributed gratis, or at reduced prices, to the poor. The government – which already owned most mines, quarries, and salt deposits – brought nearly all major industries and guilds under detailed control. 'In every large town,' we are told, 'the state became a powerful employer, standing head and shoulders above the private industrialists, who were in any case crushed by taxation.' When businessmen predicted ruin, Diocletian explained that the barbarians were at the gate, and that individual liberty had to be shelved until collective liberty could be made secure. The socialism of Diocletian was a war economy, made possible by fear of foreign attack. Other factors equal, internal liberty varies inversely with external danger.
"The task of controlling men in economic detail proved too much for Diocletian's expanding, expensive, and corrupt bureaucracy. To support this officialdom – the army, the courts, public works, and the dole – taxation rose to such heights that people lost the incentive to work or earn, and an erosive contest began between lawyers finding devices to evade taxes and lawyers formulating laws to prevent evasion. Thousands of Romans, to escape the tax gatherer, fled over the frontiers to seek refuge among the barbarians. Seeking to check this elusive mobility and to facilitate regulation and taxation, the government issued decrees binding the peasant to his field and the worker to his shop until all their debts and taxes had been paid. In this and other ways medieval serfdom began."