Too frequently, media analysis of Twitter reverts to an intense criticism of what it is not. As a former member of "the media" (I used to work at the Chicago Sun-Times, as well as a few other online sites, allmusicguide, RollingStone online, Salon.com), I have some opinions myself. But because my job no longer depends on advertising content (now an attorney), I might have some different conclusions on the subject.
I love books. Musty books. Hardcover books you have to hold on the spine so they don't fall apart. I like to go into old libraries, hide in dank basements, and read dated books on dated subjects. Just now, I'm reading Men and Rubber, a book from the late 20s, which I highly recommend. I probably average two a week, and I have since I was in high school. And I love Twitter, too. And before they became largely irrelevant and lost nearly all of their talent, I loved magazines and newspapers.
To appreciate any of these media, and to develop yourself as a 21st century Human, you get nowhere focusing on what they are not. However, you can develop a significant edge by using all of them to your advantage. Reading Wyckoff and LeFevre will give you the background and sage wisdom on trading and investing, but reading tweets from Hamzei, Kass, and Adam Warner will give you a glimpse of what the masters are doing in real time. Reading Halberstam on your front porch might be the best way to get a full portrait of Michael Jordan, but Deadspin can give you a much needed break from a stressful work day. And its zeitgeist fits as much with this time as Halberstam did with his. None of these is mutually exclusive.
If you take any single tweet from an unknown source as gospel, you're a fool. But no less of a fool as someone who believes everything she reads in print as sacrosanct. Today, as in prior generations, the onus is on each of us to determine which sources to rely upon and to what extent. Just as the onus is on the information source to create a viable means of publication. That we should have more sources of information is not a curse, but a tremendous advantage. If you spend your life twittering, and you never read a book, it won't be twitter's fault that you're shallow. It will be your own.
Twitter is a news source. Raw as sashimi, but news nonetheless. What you make of it is up to you.
Thursday, June 18, 2009
Tuesday, June 16, 2009
Demographics and Debt
Paul Krugman recently published an article called stay the course, which urges politicians to keep priming the stimulus, despite all the green shoots that are coming out of our eyeballs. He argues that if we do not continue to stimulate, that we run the risk of repeating the errors of 1937 in the US and 1997 in Japan. In both instances, governments took for granted that their respective economies had recovered, changed their focus from stimulus to fiscal responsibility. This shift, we now believe, led to each falling back into recession, giving up prior gains. For a fantastic in-depth analysis of this point, please read The Holy Grail of Macroeconomics by Richard Koo.
In a sense, I agree with Krugman. This economy needs constant government stimulus to replace slack private demand, or else we'll see 10-20% unemployment indefinitely. Where Krugman and I differ (or not, I've never heard him speak to this point) is in my belief that, for the foreseeable future, the US economy will always need government stimulus to replace private demand. Without the federal government pumping an extra trillion-plus into the economy per annum, the days of peak credit and peak earnings cannot and will not come back.
Chart Courtesy of CrossingWallStreet.com
The strongest data point to support this I know is in the total number of people employed as a percentage of the total population. This is in a fairly severe long-term secular downtrend.
What's more, it's hard to see this improving. In Japan, Europe, and the US, this trend will likely continue for another decade or two. For one, the working age population is only growing slightly. Meanwhile, debt as a percent of GDP is
exploding.
Krugman is quick to point out that stable, industrialized nations such as the US have had higher debt as a percentage of GDP before. But that was at the end of World War II, when the demographics of this nation were very different. At the end of World War II, we had the baby boom, and the growing population help to pay off that debt. Now, we are developing a comparable debt burden being placed on an increasingly small percent of the working population.
It is possible that tremendous jumps in technology and productivity will enable us to escape this pickle. But even in a best-case scenario, I suspect this will remain a serious headwind for these economic juggernauts in the foreseeable future. There are no easy outs in this one. Either dump a larger percentage of debt onto an ever-shrinking working population, or suffer a decrease in demand, which will lead to even smaller working population, and most likely, a debt burden just as severe as the stimulative approach because of the reduced top line.
Does this mean that the Dow is going to 2,000? Or 20,000? It doesn't imply or preclude either. What it means to me is that Siegel's 7% annualized S&P growth over the past 150 years was dependent upon working population growth that was significantly above what it is today. My best guesstimates make me think that the first half of this century could see growth reduced in proportion to the size of the working population. There's too many variables (at least for me) to calculate what that might amount to with any precision. But it's scary knowing that it's there.
In a sense, I agree with Krugman. This economy needs constant government stimulus to replace slack private demand, or else we'll see 10-20% unemployment indefinitely. Where Krugman and I differ (or not, I've never heard him speak to this point) is in my belief that, for the foreseeable future, the US economy will always need government stimulus to replace private demand. Without the federal government pumping an extra trillion-plus into the economy per annum, the days of peak credit and peak earnings cannot and will not come back.
Chart Courtesy of CrossingWallStreet.com
The strongest data point to support this I know is in the total number of people employed as a percentage of the total population. This is in a fairly severe long-term secular downtrend.
What's more, it's hard to see this improving. In Japan, Europe, and the US, this trend will likely continue for another decade or two. For one, the working age population is only growing slightly. Meanwhile, debt as a percent of GDP is
exploding.Krugman is quick to point out that stable, industrialized nations such as the US have had higher debt as a percentage of GDP before. But that was at the end of World War II, when the demographics of this nation were very different. At the end of World War II, we had the baby boom, and the growing population help to pay off that debt. Now, we are developing a comparable debt burden being placed on an increasingly small percent of the working population.
It is possible that tremendous jumps in technology and productivity will enable us to escape this pickle. But even in a best-case scenario, I suspect this will remain a serious headwind for these economic juggernauts in the foreseeable future. There are no easy outs in this one. Either dump a larger percentage of debt onto an ever-shrinking working population, or suffer a decrease in demand, which will lead to even smaller working population, and most likely, a debt burden just as severe as the stimulative approach because of the reduced top line.
Does this mean that the Dow is going to 2,000? Or 20,000? It doesn't imply or preclude either. What it means to me is that Siegel's 7% annualized S&P growth over the past 150 years was dependent upon working population growth that was significantly above what it is today. My best guesstimates make me think that the first half of this century could see growth reduced in proportion to the size of the working population. There's too many variables (at least for me) to calculate what that might amount to with any precision. But it's scary knowing that it's there.
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