Friday, May 15, 2009

World Cup Final: Green Shoots vs. Yellow Weeds

The match was on when President Obama spoke of "green shoots" as signs of economic recovery. Nouriel Roubini quickly countered by pointing to "yellow weeds" signaling possible continued recession. In recent days the ball has been more on the Green Shoot's half of the field, with the Yellow Weeds getting somewhat the better of the play in a midfield game. No big scoring opportunities for either team over the past week.

Notably (at least for this observer) the Weeds have been unable to get their game-changing player onto the field: he's Dollar Crisis, the story of the dollar's beleagured status as the world's global reserve currency. In London he appeared for a moment with the May 12 FT story on "America's Triple A rating is at risk". But not in the U.S., where American financial media ignored (suppressed?) his brief appearance. CNBC Europe mentioned him here - but not CNBC U.S., so far as could find at the CNBC site. We've been tracking the fate of the dollar here since March 23. I'm amazed at paucity of coverage of this story in the U.S. Mainstream financial media reject it as mere chatter of the Goldbugs who yearn for a dollar bust and a gold boom. Goldbug are always talking up the immanent collapse of the dollar, yet goldbugs like Jim Willie are well worth following - just take a look at what he said in January of 2008:
The year 2008 will be the year that THINGS JUST PLAIN BREAK. It will be a truly deadly year, unavoidably lethal to the US Economy and especially to the banking sector. Nothing has been repaired. Some tangible solutions will be offered in the next section [of his post], all legitimate in a real world. However, we do NOT live in a real world, but rather in a Fairy Tale world of US Hegemony and Wall Street with a choke hold around the entire system.
Willie is a libertarian investor with a strong populist streak. He is not alone in his thinking and I suspect central bankers keep a close eye on folks like him. If and when the Weeds finally get their man Dollar Crisis onto the field - watch out. Meanwhile, or failing that, here are some notable Shoots vs. Weeds takes on the topic of economic recovery.
  • Nouriel Roubini and his team dig deep and offer a region-by-region global survey in "Green Shoots or Yellow Weeds?" (Forbes 5/14)
  • Maria Bartiromo interviews Nouriel Roubini and Harvard Economist Ken Rogoff in this CNBC video. Roubini sees more Weeds than Shoots; Rogoff too. At 5 min 20 sec note their responses to Maria's question about the possibility of the Obama administration's growth forecast of 4% in 2011. (5/15)
  • The Economist's Special Report on the fat green shoots for international banking looks like yellow weeds in reader comments. (5/14)

  • Samuel Brittan at FT weighs "Green Shoots and Dud Forecasts." (5/15)
  • David Brooks discusses neither Shoots or Weeds but the health care dilemma confronting President Obama: "If you . . . talk to enough experts, you come away with a stark conclusion: There are deep structural forces, both in Medicare and the private insurance market, that have driven the explosion in health costs. It is nearly impossible to put together a majority coalition for a bill that challenges those essential structures. ("Fiscal Suicide Ahead", NYT 5/14)
  • In this entertaining 7-minute video, New York financial consultant Howard Davidowitz demolishes the Shoots story (rhetorically at least - and at least somewhat substantially - listen to his comments on commercial real estate). (Yahoo Finance Tech Ticker 5/15) (Thanks, Yves)
  • Big one for the Green Shoots? Donald Luskin writes that Northwestern University economist Robert J. Gordon, pointing to reduced numbers of "jobless claims" - claims from the unemployed for jobless benefits - says the recession is over. (Smart Money 5/15)
  • Alan Blinder, Princeton economist and former Federal Reserve chairman, likes the Green Shoots but warns against premature tightening of the economy like that of Roosevelt in 1936 that plunged a recovering America back into recession. (NYT 5/16)
  • Martin Wolf of FT casts an influential if cautious vote for Green Shoots and for the future of capitalism (5/19)
World Cup Final? Let's go it one better. Imagine a global civic media contest with an audience of billions participating in a contest of contests to find best solutions to the world's economic plight. This contest could happen today except for resistance from the world's governments and financial elite, who seem to want it not to happen. The technology for it exists: the contest would integrate the resources of American Idol, telephony, a TV channel like Discovery or CNBC and social networks like Facebook, MySpace and Twitter.

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