Dana Blankenhorn

What I Learned on my European Vacation

Regular readers have missed me, I hope.

I took a two-week break to take my bride of nearly 46 years to Europe. Specifically, we flew to Germany, where my father’s people came from. On our first day we saw a ruin called Castle Blankenhorn, built in the 12^th century. Folks who came from that castle, which was controlled by the Hohenstaufen dynasty, took its name when they moved on.

We moved on, too, in a 2022 VW Tiguan with a 6-gear stick shift, along Autobahns which at times had no speed limit. We saw the Neuschwanstein Castle, the fairy tale accompaniment to an older pile built on a ruin like “da castle a my fadder.” We saw a statue dedicated to Carl Laemmle, the founder of Universal Studios (and 20^th century Hollywood). We went to a soccer game in Ingolstodt, visited its street festival, and explored the “Romantic Road,” created after World War II specifically to lead tourists to medieval sites (and extract their money). I do wish they extracted a little more of mine, in the form of hats, t-shirts and the like, but they’re still into books, postcards and refrigerator magnets.

Lean Into $100 Oil

Markets are being spooked right now by Saudi Arabia’s decision to join Russia in cutting oil supplies. 

If oil prices stay high or go higher, analysts say, the economy may go into recession, and President Biden’s re-election will be threatened. 

I think there’s one weird trick that can prove a decisive point in world history.

Lean into it.

Accept higher oil prices. Note that American oil companies benefit. Explain that higher prices, and lower consumption, are essential in the fight against climate change. Highlight the growing cost disparity between fossil fuels and renewable energy, which continues to grow.

The Sauds and Russians think they have us over an oil barrel.

We should make this a decisive moment for putting them over one. 

There will be short-term pain because the analysts are right. Higher oil prices could tank the economy. They could cause a recession.

But, like the song says, your creature comforts aren’t the only things worth fighting for. The point of Biden’s economic policy has been to create American supply chains in energy, transportation, and manufacturing. The money to build these supply chains is being spent, supported by billions in private investment.

Meet the New Slum

Building a 21^st century city means ditching late 20^th century street plans in favor of the era before World War II.

That’s because 21^st century cities demand density, and mixed uses. The idea of fixed use zoning – offices, stores, homes separate – needs to go away. The most bike-able parts of Atlanta are on the east side, where Atlanta, Decatur, and Avondale Estates all had established street plans before Pearl Harbor. Outside that, roads are a half-mile apart, everyone is on a cul-de-sac, and you need a car to go anywhere.

Decatur can be a model, if area parking decks are organized so streets like Clairmont and Ponce de Leon can become car-free. What’s left are rows of four story blocks with homes or offices upstairs, restaurants and retail on the ground floor. This leaves room for small parks, which the nearby MARTA station delivers. It’s the best planned urban space in the Atlanta region.

DeKalb County had a chance to replicate this a few miles to the east, at the Kensington MARTA station. Instead, what’s going up are Stalinist rectangular blocks surrounded by street-level parking. It’s a 21^st century Pruitt-Igoe that will, by 2035, have the highest crime rate in the region.

Could Xi Fall?

It’s a question no one is even asking.

Could Xi Jinping fall from power?

There is no evidence for this. He is in his third term as China’s President, and increasingly acts like Vladimir Putin. He’s committing genocide in Xinjiang, he has destroyed Hong Kong’s economy, and he is threatening to invade Taiwan. He has absolute impunity. He is the world’s strongest dictator.

But how secure is he?

Unlike every other dictator on this planet, Xi Jinping presides over a complex, post-industrial economy. As I’ve been writing for decades, such an economy relies on highly trained, educated, and motivated people. The secret to America’s success lies in our ability to create, encourage, and (when necessary) import such people. (I know Trumpism threatens all this, but that’s another story for another time.)

The E-Bike Life

I have been an urban cyclist for 45 years.  But age is real. At 68, a short ride can easily send my heart rate to places it shouldn’t be.

The answer is an e-bike.

I have been using an e-bike we bought for my son’s commute for several months now. The e-bike I chose is the Lectric XP 3. It cost $1,000, amazing because my old road bike cost me $800 in 1981.

The Lectric is foldable. It’s too heavy for a bike rack, but it breaks at the base and the handlebars so you can get it into the trunk of a Toyota Corolla. The battery is in the down tube. You plug it into the wall. (Unplug it as soon as the light goes green.) Top speed is 20, with pedal assist, but the weight lets it run down Atlanta’s hills at 25-30. Range is estimated at 20 miles but the way I ride, which is carefully, it’s closer to 30.

Detroit Gets a Clue

Two facts have stood out in my coverage of Chinese Electric Vehicles (EVs) for InvestorPlace.

First. The most successful luxury brand in China is a hybrid. Li Auto has surged past rivals Nio and Xpeng by using a gas engine to extend range. Its latest SUVs go far enough on a charge, a few hundred miles, to do daily chores, recharging overnight. There’s a gas engine powering the battery and electric drivetrain, however, that can deliver a range of 800 miles. The Plug-in Hybrid (PHEV) approach answers the objections of families who want an electric, but also want range and all the size, bells, and whistles they’re used to.

Second. The most successful Chinese EV company serves the mid-market. That would be BYD, whose electrics sell in the range of $25,000 each. They may outproduce Tesla this year.

Biden’s Plan Worked. Get Over It

Business reporting should be about telling people what they need to know, not what they want to know.

That’s not businesses are buying. Sad. It’s not what they’re getting, either.

Too many businessmen only want their egos massaged, and their political inclinations confirmed. This is true when it comes to reporting, my own field, where we have Forbes, Fortune, Business Insider, and a host of other Republican-leaning publishers spinning the news. It’s doubly true for CNN and CNBC. The latter has an on-staff “wealth reporter” specifically hired to fluff the egos of his betters.  

Sadly, it’s also true for economists, those “experts” hired by big banks and brokerages to figure out where things are headed.

Over the last month I’ve been treated on TV to a parade of so-called financial experts, each one confidently predicting that a recession is imminent, that it’s baked in, that it will likely be severe. These jamokes have insisted this will end the drive for working from home, that it will end demands for higher pay, that it will bring employees crawling on their knees to their bosses for a crust of bread, a revived dress code, and a two-hour daily commute.

It was all bullshit. It was spin. It was politics. It was telling people what they wanted to hear.

The evidence is in. GDP grew 2.4% in the last quarter. The economy isn’t slowing. It’s speeding up.

Want to know why? I’ll tell you.

How Long Can Economists Be Wrong?

The truth about macro-economic prediction is this.

No one knows anything.

Empirical macroeconomics is in its infancy. The first macro book based on real data I can recall is Thomas Piketty’s Capitalism in the 21^st Century. Because the author’s conclusions were considered liberal, it was largely ignored.

Economics since Adam Smith has mostly been witchcraft. It has been based on feelings, on assumptions, in short on ideology. Economists have decided this is the way it must be because their bosses say so, then they twist reality to fit the theory. The assumption is that when prices rise, suffering must follow. The only way to get good times is by giving people hard times. (Not economists, of course. Never economists. Little people, working people, poor people. Other people.)

Most of what we “know” about how economic systems work is bunk. Capitalism only works in practice, as billions of people buy, sell, make, and trade with each other. But practice offers nothing to moralists.

Most economists are politicians, or if not they work for them. And almost all politicians are moralists of one sort or another.

This divergence has become both obvious and obnoxious. Countless economists keep predicting an imminent recession. Some think it will be very bad. Reality refuses to cooperate.

The Federal Reserve says it is “data dependent,” and the data it’s looking at is prices. Those prices are increasing, but at slow and slower rates. The economy, meanwhile, keeps rocketing along. Why?

A Lesser Class of Billionaire

I’m old enough to remember when the image of a billionaire was of a man like Sam Walton, who walked humbly and became the source of stories focused on how he was just like the rest of us.

He was followed by people like Bill Gates and Warren Buffett, who saw wealth as a tool, and who resolved to give that tool away when they were done with it. Other wealthy people emulated them, signing pledges to give their wealth back to the commons, because everything we have is merely borrowed from our time and must be recycled when we’re gone.

Over the 15 years, however, a new kind of billionaire has emerged. They’re malevolent, not benevolent. Some of their fortunes, like that of Elon Musk, are self-created. Others, like that of David Sachs, are built using other peoples’ money. Still others, like Harlan Crow, just inherited their wealth.

But this new class of billionaire is uninterested in their fellow citizens. They see wealth as a means with which to both obtain political power and maintain it even after they’re dead. They now control our courts, they fund our elections, and they think they’re better than anyone else.

Billionaires are now threatening the very structure they built.  

Food Riots

I wish I had better news today, but how can you grow food at temperatures that kill germs? 

You can’t.

Food riots are coming, all around the world, in the wake of the “new normal” that is 2023. 

With temperatures averaging over 100 in the growing regions of Europe and North America, I can’t see a big crop coming in. Those temperatures are going to move to the southern hemisphere this winter, burning Brazil, Argentina, and Australia. Everyone’s talking about El Nino. Fewer are talking about this new normal.

Food may be an inflationary story in the west, but it’s a survival story in the global south. Few are paying attention to the coming starvation. Wars, even “good wars” like the one in Ukraine, are environmental disasters on many levels. That war needs to be ended, quickly, which means a deeper involvement in the near term, and greater risk.