Dana Blankenhorn

Economic Struggle Beneath A Political Surface

Think of this as Volume 18, Number 16 of the newsletter I have written weekly since March, 1997. Enjoy.

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Beneath every political struggle in American history there is always an economic one below the surface.

The Civil War was about tariffs and states' rights, according to the South. It was about slavery, according to the North. But it was really about mechanization, about machine power replacing human power. Manufacturing won the war, and provided America's new economic model.

The same was true during the Progressive Era a generation later. It seemed to be about human dignity and the power of corporations. It was really about national markets and the inputs needed for mass manfacturing.

Again, the New Deal. Economic collapse? Not really. It was about economic systems, the false choices of fascism and communism on one hand, democracy and capitalism on the other.

The same was true with Vietnam. It seemed to be about the Cold War, when it was really about a switch from manufacturing to technology, from hands to minds, as the center of economic life.

Which brings us to the present day.

Halftime Show

Think of this as Volume 18, Number 15 of the newsletter I have written weekly since March, 1997. Enjoy.

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The recent stock market correction makes for a fine half-time show on the current recovery.

Every economic cycle has these moments, when a premature end seems inevitable for one reason or another. It is often based on an incorrect assumption about what the underlying recovery is all about. In the 1990s, some people actually thought PCs and “multimedia” were driving the economy. In the last decade, people thought it was housing demand, not deficit spending on weapons.

So it is today. Cloud companies, social companies, and mobile companies are powerful, but Facebook, Google and Apple aren't why the economy is growing. These are all underlying trends that save money, they don't create growth.

Growth comes from making what didn't exist before. Clients and servers have been around a while. The Internet has been around a while. They're adjuncts, sideshows, and they're getting ahead of themselves. A correction can be a good thing.

In fact, this is an energy economy. I've said it before, but it needs to be repeated.

Publishers Wanted

Think of this as Volume 18, Number 14 of the newsletter I have written weekly since March, 1997. Enjoy.

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Journalism has been caught in a trap of its own making.

I call it the “run of network trap.” Sites that depend on advertising are going for raw page views, offering clickbait and other types of journalistic fast food, rather than anything resembling insight or enterprise.

I've played this game myself, at Seeking Alpha.

I wrote lots of stories there about Google, or Apple, or Microsoft, because I knew that they would draw clicks and I was getting paid one cent per page view. It worked. I made money. The site made money.

Potemkin Markets

Think of this as Volume 18, Number 14 of the newsletter I have written weekly since March, 1997. Enjoy.

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When the business day begins, thousands of well-off people turn on their TVs to Squawk on the Street or Opening Bell, its Fox Business equivalent.

They think they're learning how to get rich. They're thinking they're learning what money is doing.

They're wrong.

What they're seeing is a TV studio surrounded by displays for what is, in the end, just the very tip of the financial market iceberg.

Trading does not really happen on the New York Stock Exchange – TV happens there. And the stock market represents only a very small portion of the financial market.