Dana Blankenhorn

Wall Street is Wrong Again

Wall Street is wrong again. But then, it usually is.

Wall Street is a casino. If no one trades, there’s no action. It’s in the Street’s interest to keep the action going. The way to do that is to convince investors that they’re wrong and the grass is greener somewhere else.

The latest myth to be smashed is in the direction of the economy. Wall Street placed big bets on slowing growth, on money costing money and on tech’s cash flows being discounted.

Wrong again. Fourth quarter GDP was again very strong. There are already indications the inflation storm is abating. The reason is technology, which continues to cut costs from manufacturing to the final sale.

I’ve now spent a decade covering markets, after three decades covering tech. My tech stories focused on the lessons of business, and my business stories focus on lessons from tech. I’m not trying to sell you anything. I’m a reporter. I’m telling stories, most of which happen to be true because I’ve been at this a long, long time.

What to Teach Journalists

I have always had a love-hate relationship with my journalism education, which came from the Medill School at Northwestern University in 1977-78.

Back then Medill taught that journalists were people who worked for people who bought ink by the barrel. The analogy has shifted (bits by the petabyte) but the idea remains the same. Journalists work for others. We have no real control over their career path. We’re dependent.

I can understand that. It’s a comfortable feeling, getting a paycheck and ignoring the market. But I didn’t get to be my class’s last man standing on his beat by being dependent. I’m a freelance. I have defined my own coverage area, which is the future with a business orientation. Following the Medill career path would have had me out of this business decades ago.

Real vs. Real

Analysts, and investors, are always fighting the last war.

The last war was the asset bubbles of the 1990s and 2000s. The first was in tech. The second was in housing.

Both fell after the bubble hit. Both times the government responded by juicing demand, first with the “forever wars,” then with a domestic stimulus and helicopter money.

Both times, this worked because the problem wasn’t related to what happened during the 1970s. Back then, resource inflation was to be feared. There was no substitute for oil. Now it’s just speculation and its aftermath.

The same kind of blow-off is happening now. There’s a fear that money will cost money, so speculators are pulling back, selling everything else to raise cash. (Cash is doing fine.) So far, it’s not nearly as bad as what came before. But fear is gripping the market because, this time, it’s accompanied by inflation.

Correction?

We’re not seeing a crash, but a correction in real assets.

There is a crash for garbage. Garbage cryptocoins. Garbage stocks. Garbage assets of all types.

Here’s why.

When money costs money, even a little money, things that were bought with free money are worth less. The punch bowl has been taken away. Those who benefitted from the party are throwing a hissy fit.

Inflation, they scream. Crash, they cry.

Uh, no. Markets adjust.

Imaginary Crisis

One thing I have learned reading American history is that every generation feels it’s in an existential crisis.

Usually, they’re right.

In the Founders’ generation, John Adams passed a Sedition Law against Thomas Jefferson and his supporters. Then James Madison, the “father of the Constitution,” lost a war and saw his Capitol burned. America was only saved by Bonaparte’s downfall, which caused Great Britain to lose interest in us.

Jackson Democrats saw Whigs as oligarchs, looking to destroy the poor for the benefit of a few. The death of Whig President W.H. Harrison in 1841 destroyed Nathaniel Hawthorne’s faith in democracy. Abraham Lincoln was a Whig, then 1 in every 50 Americans died during the Civil War, which was nearly lost.

March for Democracy

There is a way to make what I wrote about yesterday real.

March for it.

The King family got us rolling with this. Yesterday’s March for Voting Rights needs to grow in intensity, from now through the November election, everywhere across the country. In blue states, purple states, in the very reddest states.

Marching on behalf of causes is a common political tactic. Its results are proven over time. The problem is that it’s often done haphazardly. It’s not done consistently, strategically, with a definite aim in mind.

This year, democracy is the aim. Marching is how you make it a cause and, ultimately, the wedge issue that destroys the fascist right. (If at this point you want to pretend the fascist streak in today’s Republican Party is just cosplaying, or politics as usual, here’s your hood.)

Securing Democracy

“In the end we will remember not the words of our enemies, but the silence of our friends.”

 – Martin Luther King Jr.

This King Day, I’m angrier at Democrats than at Republicans. Millions share my frustration.

The Democratic Party made a mistake in 2021. They assumed democracy could be secured by elites. That’s not the case. It’s the people who secure democracy. No one else can do it for us. By pretending otherwise, Democrats from Joe Biden down did us all a tremendous disservice.

King Day 2021 was a celebration. It was assumed then that Democrats controlled the Congress and the White House. It was assumed that whatever Republicans tried, Democrats could checkmate it. It was assumed then that democracy had won.

Wild America Stores

There is no difference between the wild environment and the built environment.

Cities and suburbs are as much a part of the ecosystem as any national park or wetland.

In the last few years my Atlanta backyard, a few hundred feet from a MARTA rail station, has been visited by deer, rabbits, and while turkey vultures, as well as a host of predatory and preying birds and other animals.

If you want to know where the environmental war is being fought, it’s around your house. Millions of people are fighting it. They’re putting up bird feeders, planting trees, running beehives, and letting their plants grow wild.

They’re doing it without retail support. That needs to change.

You will find seed and wild animal chows in hardware stores, pet shops, and even some specialty bird stores. What I’ve yet to see is anyone offering a full set of products and services targeting homeowners who want to create a more natural ecosystem where they live.

There are products for such a store, from feeders to water gardens, from birdbaths to salt licks. Such a store could also sell services. It could send out people to inspect yards and certify habitats. It could provide environmental education and learning products to young people.

Until now, environmentalism has mainly been pursued through non-profit channels, and politics. This is one reason why the environment is losing. The market’s will is all on the other side.

Drop me a line and let’s launch this puppy.

The Limits of Rage

American history is littered with periods of intense rage.

But they fade.

I lived through one myself, the anti-war movement of the 1960s. (I was a kid, but I was there.) Anger peaked after Nixon’s election in 1968, but it faded. He didn’t need to cheat to win in 1972.

The same happened with the rage of the 1930s, when democracy seemed about to crumble under the twin tides of communism and fascism. It happened in the 1890s with the populist movement.

Rage is a drug. You need bigger and bigger doses to stay high. That’s why Trumpian Republicans keep raising the ante, keep growing more outrageous. Democrats are socialists. No, they’re anti-American. No, they’re Communists! We should put them in jail. No, we should kill them, kill them all!

For both the infected and the infecting, it’s exhausting. In the end, it’s self-defeating.

When Inflation Strikes

People are always fighting the last war. This is never truer than when talking about inflation.

Prices are rising. Oil producers are making a killing. Employees have their bosses over a barrel. There are supply chain disruptions.

There are also idiots responding that “inflation is theft” and demanding that the dollar be protected. This response made sense in 1979. Oil and other resources were the primary sources of wealth, and the only way to slow their takeover was to raise interest rates and cut the money supply.

This makes no sense today.

That’s because technology is much more effective than manufacturing was in fighting inflation. Just to give one example. Upstart uses artificial intelligence to decide whether someone should get a loan. Instead of just using credit scores, they use 1,000 variables that let banks more than double their lending without increasing their credit risk. The software does a better job than a loan officer. Why have loan officers?