Watch out folks for tempestuous markets. In the midst of a war, an energy crunch and a continuing telecom regulatory paralysis, Greenspan has joined the self-destructive Administration effort to force China to raise the prices of its exports to us. (Great idea, increasing the prices of all high-tech companies that depend on foreign components and skills. Disrupting the world's fastest growing importer and largest market for U.S. technology. Devaluing the U.S. economy.)Forbes has also published an article on dollar policy as it relates to the US and China. None of this volatility is good for any one, and it looks like no one is willing to step up to bat just yet.
Greenspan's delusional debacle of dollar bashing and deficit panic in Frankfort dispelled all hopes that he is somehow a supply-sider at heart. The key test of a 21st Century economist is whether he can grasp globalization. Nearly all trained academics and their disciples in politics fail the test. Unfortunately, the names cited to replace Greenspan, such as Bernanke, are even more delusional in their economics than Greenspan has become. Moreover there is not a single economic columnist in any major publication who has any idea what is going on.
Like nearly all establishment economists, these guys believe ardently in national economies, insulated from one another, exchanging goods and services
across their borders, with equillibrium maintained through gyrating of currency values. They treat money as their elastic plaything rather than as the standard of value--the clock and measuring rod--for the world economy. They retain the notion that foreigners holding dollars somehow pose a threat that is different from the threat posed by George Soros or a thousand hedge funds holding far more dollars than foreigners do. So Greenspan joins the chorus declaiming a fake deficit crisis and virtually calling on dollar holders to sell.
The result will be another stupid and unnecessary technology crash, continuing the current devaluation of U.S. markets as the dollar falls. The danger is that these setbacks will defer or compromise the aim of retrenching tax rates and regulations as blind politicians administer yet more self-destructive policies in the wake of their initial mistakes.
The incumbent monetary wizards treat the U.S. as if it were chiefly a producer of commodities purchased on price rather than a source of technological value-added largely based on imported components and devices. A cheap dollar policy is a cheap nation policy. Greenspan prefers to compete with third world labor and resource industries rather than to collaborate with first world innovators who use the best gear and resources from around the globe.
However, we try to steer clear of macromancy around here. Bad monetary policy creates panic and confusion in which shrewd stock picking can prevail. So let's contemplate a stock that can thrive over time regardless of the astrologers in charge of economic policy …
I fear that this is just the beginning of a long learning cycle, that we're all going to have to suffer through.
