Equity Theory, Jishuki, Second Round, Dead Detroit, London Lessons, Bizarre Belgium, Choices, Complicated, Much Ado, Go John!

Articles on equity market efficiency or lack thereof, how Japan’s catastrophe reaction of self-restraint will pulverise the economy, thoughts about inflation in Germany, can Detroit come back from the dead, how come London didn’t crater, and how Belgium runs – successfully -- without a government.

Also the Economist’s take on President Obama’s complicated world, the Canadian federal election looks today to produce same old same old, and our endorsement of John Horgan as leader of the provincial NDP.

Image Wakashu and Hama Yumi -- Harunobu Suzuki (1724-1770)

Asked during the 2006 Federal Election what I believed, I answered, that ‘the market is not rational and justice is not blind’.

Benjamin Graham, Peter Cundill, Tim McElvaine agree on the first point and have the investment returns to prove it.

Is the market efficient and accurate or inefficient and incorrect?

Increasingly the proof points to the latter.

Wall Street Journal -- Investment Strategy: All About the Benjamins
Two disparate views of markets represent well the range of opinion among U.S. stock market participants today. One is a devout faith in market efficiency and the supremacy of market pricing as a reflection and forecast of fundamental value. The other expects errors and biases in market pricing.

I have been very lucky to have worked with some incredible people in my career. None among more intelligent, disciplined and decent than Virginia-born and raised Andrew Shipley who lives and works in Singapore for Komodo Capital. Komodo Views is worth a visit.

Komodo Views

In an interesting contrast to the reaction in the United States to collective tragedy – consume people! -- Japan tones it down, a lot. (ed’s note – watch for an outsized reaction on the downside to economic activity). Thanks to Ken of Tokyo/Hong Kong for sending this in.

New York Times – In Deference to Crisis, a New Obsession Sweeps Japan: Self-Restraint
Even in a country whose people are known for walking in lockstep, a national consensus on the proper code of behavior has emerged with startling speed.

Another lesson from Japan.

New York Review of Books – Japan’s Radiation Scare: The Good and the Bad
In news coverage of the unfolding disaster at Japan’s Fukushima Daiichi nuclear plant, two themes have been particularly prominent.

Prices go up and they go down. The challenge for any economy is whether it is capable of adjusting – capital and labour – and whether the banking sector is juiced or not by monetary policy. Deutsche Bank explains the German example.

Pdf below -- Growth and Inflation Perception Problems


New York Times -- Food Inflation Kept Hidden in Tinier Bags
Chips are disappearing from bags, candy from boxes and vegetables from cans.

What to do about Detroit whose population has shrunk 25% in a decade.

New York Times – The Incredible Shrinking City
Census data released last week showed that Detroit's population had plunged 25 percent over the last decade.

Of course, it is real easy to blame those nasty corporations BP and TEPCO for the more recent environment catastrophes but how about governments that don’t regulate and consumers that don’t discriminate? (ed’s note – regulation matters, and the best companies want it because it keeps rogues out of the market)

National Post – Gulf War
One difference between Japan's nuclear meltdown and the BP blowout in the gulf last year is that Masataka Shimizu, the chief executive of Tokyo Electric Power Co., which controls the Fukushima Power Plant, has been conspicuously absent from the media.

With the risk of the deepest decline in living standards since the Depression hanging over the city of London, how come it has come out of the downturn so well? The economy is more diversified than first thought, and the bank bailouts didn’t hurt either. (ed’s note – in time of peace live in big cities, in time of war small agricultural towns).

voexed.com – How Did London Get Away With It?
It was widely expected that London would be the most severely hit of the UK regions in the recession brought about by the 2007-08 financial crisis. London was more reliant on financial services, it was argued, and because financial services were most directly affected, incomes and employment were expected to fall harder than in other cities (Oxford Economics 2008).

How a high income country ethically divided with high debt to GDP ratio has been running along just fine for 10 months without a functioning government. Welcome to Belgium.

National Post – Should the World Be More Like Belgium
This is a European country riven by ethnic tensions.

In a great follow up to the Tiger Mom controversy, Caitlin Flanagan reminds us that life is about choices, and getting into an Ivy League school in the 21st century, really, really, really hard. The other message, both choices are ok.

Atlantic – The Ivy Delusion
RIGHT NOW, IN admissions offices in Cambridge and New Haven and Palo Alto, the teenage children of some of America’s most thoughtful and devoted mothers are coming in for exceptionally close scrutiny—as is, so these women feel, the parenting they have offered their youngsters for the past 18 years.

Quote worth quoting.

“Chua has accepted, in a way that the good mothers will not, that most children today can’t have it both ways: they can’t have a fun, low-stress childhood and also an Ivy League education.”

President Obama’s response to all of the upheaval underway in North Africa and the Middle East has been called many things. We like this description the best, complicated. (ed’s note – in a good sort of way)

Economist – First. Stop the War Crimes
MY COLLEAGUE Lexington is right to argue that Barack Obama made a "good case" for the war in Libya last night, providing "the clearest explanation so far of an 'Obama doctrine' of humanitarian military intervention."

Bill Curry reports that the early polls point to same result as last time.

Globe and Mail – Harper 10 Points Up in Early Day of Stagnant Campaign
Canadians are prepared to send MPs back to Ottawa in virtually the same proportions as last time, according to new Nanos polling numbers.


308.com – Positive Signs For Liberals in New Projection
Baby steps, but the Liberals have their first set of good news this morning. The party has made small but encouraging gains in most parts of the country.

Yesterday we had the privilege of endorsing John Horgan as leader of the provincial NDP and the next Premier of British Columbia.

John Horgan – I’m For John
“John sees the great opportunity that businesses have today in British Columbia to create wealth, as well as the challenge of competing in a highly competitive global economy.”

Related. (ed’s note: life is complicated and the slings and arrows of outrageous comments)

The Tyee – Former NDP Candidate Predicts Harper Majority
A former New Democratic Party candidate and economist says Prime Minister Stephen Harper's Conservatives will likely win a majority in the May 2 federal election.

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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.