Fear the Dragon?

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The casual joke turns on China knocking on our door in the middle of the night on a repo call.  Like a lot of jokes it’s a way of laughing off a genuine fear – that they US is slowly being owned by a nation that isn’t exactly friendly and we have no reason to trust.  Paranoia sometimes sets in when people wonder why China would loan us all this money in the first place – has this been a plot all along?

A hard look at the Chinese Dragon shows that not only is there little to fear from them, they have far more reason to be afraid of us.  And they’re pretty open about it, too.

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Awfully Artificial

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Words mean things, or so the saying goes.  Unfortunately, the world changes so words have to change.  That’s where it gets interesting.

English is an adaptable language that mutates easily.  The problem is that language is useful for both communication and identity, so people sometimes deliberately use a word in a different way to show what group they belong to.  There are also things that defy description.

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Value of Information

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When the NY Times announced it was installing a complex paywall plan in April 2011, most internet mavens predicted failure.  Conventional wisdom has long told us that information is supposed to be free on the internet – despite the fact that this argument leads to the logical conclusion that the internet is literally worthless.  Brushing that aside, the NY Times hoped to gain 300k subscribers in its first year and show that there is indeed a value to quality information, possibly making it distinct from information as a commodity.

It worked.  In the first three months the NY Times achieved 224k subscribers directly, plus decent income in other areas that were not part of the standard they were to be judged by.  People will indeed pay for news on the internet.

The implications of this are potentially vast if we can learn from this experiment.

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Death of the Mighty Dollar

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The gamesmanship of Congress is still reverberating through the world’s financial system with a big drop in stock markets today.  But that may be only the start of the problems caused by the self-inflicted calamity.  At risk is the source of the USofA’s real power around the globe – not the military, but the US Dollar itself.

The high standard of living enjoyed in the US is based on the fact that our currency is the standard “reserve currency” across the globe.  All commodities and many long-term contracts are priced in US Dollars.  If, or more likely when, that comes to a screeching halt the implications are vast for our economy and just about everything we do.  Where it gets interesting is that, done well, it could be a liberating experience.

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Fear Itself

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It’s been a busy week on the economic front.  Congress got its act together, sort of, and passed a debt ceiling raiser that a solid majority of Americans considered “ridiculous”.  The Dow Jones Industrial Average dropped 500 points in response to this, a new salvo in the currency war, and uncertainly about jobs.  Today it may gain some of that back now that the July jobs report shows solid gains, however.

If stock traders and reporters alike seem to be hopping around like scared bunnies, there’s a reason for it – uncertainty induced fear.  If you are afraid for your own future, you’re clearly not alone.

That may sound like small comfort, but it shouldn’t be.  Confronting our fears will be the first step to recovery.  You can read that as either pop psychology or economics.  The source of the fear, however, will take us some time to work out because it’s a major feature of the world we live in.

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