CHAOS-ONOMICS: Strangely Attracted to the Truth
chaos-onomics.com
Apr 11
If you believe
They put a man on the moon, man on the moon
If you believe
There's nothing up this sleeve
Then nothing is cool
R.E.M.
Washington plays host to a series of important meetings this weekend, with the World Bank, IMF and G8 all coming to town. While of late these affairs have produced little in the way of public proclamations besides a generic statement of consensus, which more and more reminds me of Kevin Bacon's character in Animal House screaming, "Remain calm, all is well!", I think the Iraqi conflict presents an opportunity for a more visible clash of interests. Indeed, I suspect that some coalition efforts in Iraq have been directed with this meeting in mind. After all, the spoils of War are waiting to be divided.
Demagoguery, propaganda and outright deception are all part of the dance between the ruling and the ruled, however, it is also an important aspect of relations among the various rulers themselves. Popular deception can also involve the ruler(s) of one nation deceiving the people of another, thereby 'hobbling' that ruler. In a sense effectively deceiving a ruler can prove far more effective than deceiving a population as the people can change their mind but rulers are loathe to walk that path. Worse, rulers are reluctant to admit they were fooled. Can't have the hired help thinking idiots are running the show, now, can we. When I think of the images of Saddam's statue being 'toppled' which filled TV screens and adorned newspapers around the world, and consider the crucial decisions which, during these weekend meetings, may flow from minds freshly imprinted with these images, I get a bit suspicious.
Let's examine different perspectives of the toppling of Saddam's statue. The BBC has a sequence of pictures here, of which this one seems representative of those carried on global newspapers. When I watched the pictures live I got the sense of hordes of people spontaneously venting. Yet, take a look at the picture below and peruse the other BBC pictures on their website. As you can see, before the US soldier moved to the statue there was, according to the pictures, almost nobody there and even during the event, the wide angle shot below, purported to be taken coincidentally, shows a fairly empty circle. Some news organizations have reported that most of the people seen in the TV footage were the hired hands of Ahmed Chalabi. In the end, he finally delivered the cheering hordes, eh.
All of which makes we wonder why Saddam's group folded like a cheap suit. Perhaps he made a deal with the coalition, perhaps he evacuated to Russia or Syria, or perhaps he is doing an Osama intending to start a guerilla campaign in which case, the bedlam caused by a total removal of the law enforcement apparatus of the nation is a great way to start. It bears watching in the coming days.
Markets are cheering the latest US economic releases which can either be in reaction to the surprisingly strong Mar Retail Sales report (+2.1% m/m SA) or more subtly a sigh of relief that deflation is not a concern as per the Mar PPI (+1.5% m/m SA core +0.7% m/m SA). To my mind, these releases suggest rapidly rising inflation and thus are not cause for celebration. The Q1 Finished Goods Producer Price Index rose by 17.4% SAAR, while Intermediate and Crude Price Indices rose by 23.8% and 159.9% respectively, which reminds me of Indonesia in 1998, not a mature industrial economy. Of course, some of the gains have already been rolled back with crude oil dipping back below $30 but in striking contrast to the 2000 oil price spike, other goods prices are also starting to rise. Given the Q1 producer price hikes and thus far tame consumer price readings, I would not be surprised to see a real shocker next week when the CPI is released.
Returning to this weekend's meetings, with all that is "up in the air" and given the recent downgrading of US economic prospects by the IMF, significant changes may be discussed. Agreements like the Plaza, Washington and Louvre accords have emerged from just such weekends so be aware that markets could move substantially next week.
In closing, please note that Argentinean Presidential candidate, Néstor Kirchner, who favors a return to a Gold standard, received important support from Robert Lavagna, the current economy minister, and bane of the IMF. While he still trails in the polls to Carlos Menem, the lead has been slipping. First round of the elections will be held Apr 27. |
