Will there be a negative quarter in China's GDP this year?

Q1 2014 was the worst quarter for Chinese steelmakers since the Asia Crisis.  The industry lost ¥2.3bn, inventories rose 43.5% q/q, and domestic prices dropped 11.3% y/y.

Wise words from an American artist

James Abbott McNeill Whistler (From “Alive to the fingertips” in TLS April 4, 2014)

·         At West Point military academy – to which he was sent, following in his father’s footsteps – he veered from one scrape to the next until finally failing a vital set of exams through “deficiency in chemistry”.  In later life he like to claim, “if Silicon had been a gas I should have been a major-general.”

·         Among his dicta was the assertion that “two and two continue to make four, in spite of the whine of the amateur for three, or the cry of the critic for five.”

·         Whistler was very self-promotional:  Degas, who admired Whistler’s work, said, “Really Whistler you behave as though you have no talent.”

100 Years of Inflation-Adjusted Gold Prices: What's next?

The Crash of 1929, as seen by Paul Cabot in 1930

From the State Street Research and Management 1930 Annual Report. (as quoted in Michael Yogg's Passion for Reality):

"All common stock investors lost, irrespective of the care with which their investments were made or supervised. No amount of research work could have prevented such losses unless it was decided that no equities should be used.

"One has only to review the utterances of leading economists, research organizations, and businessmen during the past eighteen months to discover how small is the amount of real knowledge and understanding concerning problems of major economic importance. In spite of all the research work that has been done on such prolems, it appears that common sense will remain the intelligent investor's most reliable and useful asset." (p. 55)

And yet, common sense is all too uncommon.

Mary Barra's Haiku

Andrew Capon has proposed a haiku for Mary Barra:

Ignition broken
On a side road to nowhere
The future darkens

Can Mary Barra match this?

The FT printed a poem by Li Shufu, chairman of Geely and Volvo, today:

Winter goes, spring arrives.  We quietly bury ourselves in work.
Don't argue, don't make noise.  Support Chinese brands.
Winds from Europe and America, waves from Japan and Korea.
       Why revere foreign things?
Chinese cars fly even higher. Fight bravely for a decade to make great changes.

(translated by Tom Mitchell)

The beatings will continue until morale improves: businesses lack animal spirits.

In the General Theory, Keynes pointed out that the psychology of businessmen is actually quite fragile. That is why that once they were scared (e.g. by the crash and depression) it was hard to get them investing again. "Animal spirits," according to Keynes, had to be nurtured and encouraged or they would not appear. He actually said that making new investments is usually irrational and that a mood of unrealistic optimism is needed for this to occur.

Those in government seldom understand this. They think business people are raring to go at all times and that restraining, not encouraging, them is the best policy. The truth is that businesses all over the world are now sitting on their hands and reacting to demand rather than anticipating it. They are dispirited.  Increasingly anti-business policies around the world are making the situation worse. Negative psychology is the big risk of recession/depression today.