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This Awkward Time

Posted by: Tom Keene on January 26, 2012

John Gapper, over at the FT, has the best phrase I have seen at this Dithering Davos. It is "this awkward time." Life goes on five years into crisis. Everything "Big" has access to capital, is up-to-their-eyeballs in cash and is managing expenses to Gross and El-Erian's New Normal.

But, it is awkward.

There are serious discussions. I have learned things. I have been humbled by the reach of Surveillance, Deux.

I have been led by a set of informed sources that they did not speak in 1912 like they do on Downton Abbey. They were more awkward. As, are we. Discuss.

Lose the Pablum. Stop Dithering.

Posted by: Tom Keene on January 24, 2012

Countries should fight rising inequality with policies that simultaneously curb the income gap between rich and poor while boosting economic growth.

--Reducing Inequality While Boosting Economic Growth is Possible, OECD Chief Economist Pier Carlo Padoan, via e-mail, 23 January 2012.

No kidding.

The e-mails are pouring in with various shades of "who cares about elites dithering in Davos." There is a modest set of reasons for this angst and anxiety. (The notes are more heated than last year.)

I will cut to the chase, writing at early-morning Heathrow.

The days are long over where the above totally mundane and predictable language can be considered, written and read.

Individual and institutional elites must stop with average boilerplate for average times.

Five years into crisis, and still in crisis, the thinking world is out of patience. And profoundly, everyone is marginally smarter than they were in 2006. The good economists at the OECD (replace institution as you choose) mean well.

This 2012, those not attending Davos-la desire (demand?) clarity and concision.

Non-Davos is fed up. Lose the pablum. Stop dithering. Discuss.

With a Hammer (to the Memory of Mark Blaug)

Posted by: Tom Keene on January 20, 2012

...the inflation and the stagflation of the 1970s did more to persuade economists that there was something wrong with Keynesian economics--that you needed supply-side policies and all that--than all the empirical evidence on the econometric studies against Keynesian economics. Sometimes you have to be hit over the head with a hammer before you give up a beloved theory.

--Mark Blaug, The State of Modern Economics, Challenge, May-June 1998.

We are in the moment. The moment is our perception of now (we are dithering), an interpretation of the past (we dithered), and an overconfidence of the future (we will cease dithering).

Then there is Europe.

Some ignore any sense of applied thinking and are beyond theoretical foundations. Others study and apply the applied and studiously ignore the heavy lifting of...theory.

A select few have the courage to apply, with confidence, resting on theory while questioning those very theoretical foundations.

Davos beckons. Smart people will descend. They should read Mark Blaug. (Full disclosure: a dense must-read.)

Clear the U.S. housing market. Clear Beijing's pollution. Clear Greece. We can't, unless we intellectually advance with a hammer. Discuss.

Dithering Davos

Posted by: Tom Keene on January 18, 2012

Today, when you tap a mechanical meter to increase its accuracy, you are applying dither, and modern dictionaries define dither as a highly nervous, confused, or agitated state. In minute quantities, dither successfully makes a digitization system a little more analog in the good sense of the word.
--Ken Pohlmann, Principles of Digital Audio

Dither, Wikipedia

Interest rates, spreads and a fragile Eurodollar (EUR-JPY is quite frankly a bigger deal) suggest a "highly nervous, confused, or agitated" Europe.

Why? They dither.

Dither popped up in the vicinity of a year ago, and has stuck like Greek capital in London.

Politicians dither calculating their electorates. Institutions (read Lagarde and a trans-Atlantic Geithner) dither measuring European political will. They all dither awaiting the Chinese to take export and Koestlerian profits and come to the rescue.

China does not dither. They are far, far beyond dither.

The Bloomberg helicopter awaits to take me up the Davosian valley. Men and women of great accomplishment and acclaim, will attend who did not get here from there by dithering.

It is year five of the crisis. It is a fifth year of crisis-Davos. All good people, they will meet to greet within discontent. It is a dithering Davos. Discuss.

Stop Dithering

Posted by: Tom Keene on January 15, 2012

...we have just introduced a new currency in eleven countries with different histories, cultures and backgrounds. Establishing and maintaining a European culture of stability is of the utmost importance. This also explains why central bankers regularly express their views on other policies, be it fiscal policies or structural reforms. I have done so in the past and shall continue to do so in the future - as always, on a constructive basis and in recognition of the fact that the central bank does not decide on these policies, but only gives its advice.

--Speech by the President of the European Central Bank, Dr W F Duisenberg at the 11th Frankfurt International Banking Evening in Frankfurt on 20 May 1999. Courtesy BIS.

We need to get beyond "advice" fast.

If we can assume the vigilantes (the "markets" among polite company) had and have priced in various and sundry debt downgrades, why the inconvenient move in the euro Friday.

Answer: certain things are, and I would advise are not, priced in.

President Duisenberg, two presidents and distant pre-crisis ago, desired a removed central bank giving advice but only advice.

Those days are over.

Once again, predicted events have occurred and led to advisedly predictable and unpredictable outcomes.

The unpredictable suggests Draghiesco action. (Think Madison.)

Davos beckons. 1.25 and 1.20 and 1.15? EUR-USD beckons. Iran, Nigeria and possibly higher petrol prices beckon. Austerity and its collective debris beckons.

Beckon this. Stop Dithering. Discuss.

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EconoChat captures Tom Keene's thoughts on economics, finance and investment. He is editor-at-large for Bloomberg News and hosts Bloomberg Surveillance and Bloomberg on the Economy on NYC1130, Sirius 129 and XM 130 and Surveillance Midday on Bloomberg Television. His complete interviews are at Tom Keene on Demand. Look for Tom on twitter @tomkeene

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