Stocks won’t be delivering double-digit returns for quite some time yet. Why not? Let’s do a little macro-analysis.
Why are so many Capetonians not willing to ration their own water?
Over the last few weeks a drama has been playing out in Cape Town. That drama has been called Day Zero, a moment in history when 4 million citizens will be time warped from all the benefits of modernity, to a mediaeval existence where life was centered on drawing water from a well in the town square, economic productivity was based on subsistence, and “life was harsh, brutish and short” to quote Thomas Hobbs in his famous book Leviathan published in 1651.
Here’s one way of looking at what we are doing, and how ridiculous it is.
We are a family that needs a car. We have a car. It is not the best car, sort of middle of the road. It gets us there and back, sometimes breaks down, but overall it is adequate. Other families have better cars, faster, more roomy, and so on. But ours is the most luxurious by far.
This is an ancient story from the San people of Africa (slightly adjusted) that can be read as a parable for our present times and troubles.
Elephant and Rain got married. The animals were excited: this was a real power couple. They both enjoyed the attention, paparazzi and all, but it wasn’t long before their egos got in the way of their relationship.
Elephant insisted that he was the original Big Man of Africa, that he was the most powerful. Rain, elegantly dressed in a rainbow, in turn insisted that she was the real Giver of Life, and without her everything died. That would make her more powerful than her husband. Couples therapy got them nowhere.
Of all the many banners being waved around the world by disgruntled protesters from Chile to Australia the one that reads, “We Are the 99%” is the catchiest.
It so turns out that it is also supported by some solid economic data. A report from the Congressional Budget Office (CBO) points out that, on average, income inequality in America has not risen dramatically over the past 20 years — when the top 1% of earners are excluded. With them, we see a dramatically different picture.
The search for a deal to save the euro seems futile. George Papandreou introduced some drama into the staid business of banks and governments lending money to each other by calling for a referendum to approve a bailout plan. This maneuver sent Germany and France back to their tents on the French Riveira to sulk, from where they then summonsed the embattled premier to come and explain himself. However, there is more bad news ahead if the extent of Greek tax evasion becomes known.
Here’s the startling fact: there are more Porsche Cayennes registered in Greece than taxpayers declaring an income of 50,000 euros ($68,500) or more, according to research by Professor Herakles Polemarchakis, former head of the Greek prime minister’s economic department.