Archive for April, 2011
My apologies to Weekly Recon fans everywhere for my infrequent posting as of late. Not to make excuses but it’s getting harder and harder to post while running two businesses.
This week I came across this video from the people at Econstories. It’s a very entertaining rap video featuring a debate between economists John Maynard Keynes and Friedrich Von Hayek.
This is a must watch video!
My compliments to the producers of this video for taking today’s complex issues and explaining them in a very entertaining and catchy format.
The chorus to the song says it all, “Which way should we choose, more bottom up or more top down.”
It won’t be hard to tell which economist I agree with after watching a few minutes of the video.
I thought we would try a little parody this week….
The galaxy has been in a state of turmoil since the housing pod bubble burst in the latter part of the year 608.
As the galaxy’s population watched their housing pods depreciate in value, they severely reduced their purchases of consumer items thereby severely shaking the foundations of the Galactic Economy. In response, the leader of the galaxy, Supreme Baron Legarda instituted a massive spending program to encourage all life forms to continue their purchases of telemetric screens and other goods. “The factories on the planet Sinovia must keep running!”, the Baron proclaimed.
To support the Baron’s massive spending, the Galactic Value Reserve interceded by providing unlimited Galactic Credits to the Baron’s government and further allowing all planetary banking systems to draw unlimited Galactic Credits as well. The program was named numerative facilitation.
The Value Reserve’s Grand Master assured all life forms that this course of action would raise the price of housing pods everywhere, even those cheaply built pods made from becharium on the far side of Horsehead Nebula.
As the numerative facilitation program took hold, the prices for all life support materials needed by all life forms skyrocketed and strage distortions began to appear in the Galatic Economy. The Bangars had trouble affording thorazite, the Middle Galaxy’s energy supply exports tripled in price and sadly, even the Kalifons on the planet Mos Dagalos could no longer afford their treasured gyphons.
It was then that a small band of thinkers began to question the plans of the Baron and Grand Master.
We pick up our story as our hero, Luke Bondkiller makes his way into the Galactic Value Reserve’s Temple to face the Grand Master and discover his plans for the future.
The Grand Master was sitting behind his desk looking out a large window. As Luke entered the room the Grand Master spun around.
“Come in Luke, I’ve been expecting you”
As he entered the chamber, the young Bondkiller’s emotions got the best of him as he stammered, “I want to know the truth!”
“Very well my boy…very well”, the Grand Master replied, and with this he began to explain to Luke how numerative facilitation was flooding the Galaxy with an endless supply of credits.
The Grand Master used lengthy explanations filled with eloquent prose to explain how this would eventually raise the price of housing pods and make galactic life forms begin consuming again. The Grand Master further presented complex mathematical formulas developed by the academic life forms of Zebronk that seemed to calculate just how this would work.
Luke was initially seduced (and a little confused) by the arguments, but then was able to come to his senses with a simple question. “All of what you say makes perfect sense…but only if all galactic life forms behave as you assume they will in your theory.”
“Will the Sinovians continue to hold their standard of living artificially low to produce cheap telemetric screens for export? Will the Kalifons continue to take on more debt to buy these products, seeing that they are already functionally bankrupt? And finally, won’t the value of Galactic Credits be totally destroyed by the numerative facilitation program?”
The Grand Master looked at the young Luke Bondkiller with admiration. “You are very strong with these principles young one….come join us…..and we will continue to create self serving polices that bring ruin upon the majority of galactic life forms.
How will Luke respond?….What will he say?
Stay tuned for Episode 2.
Have a great weekend,
Granite Consulting Group Inc.
Coming off our good showing last week, it’s hard not to be optimistic about the world. I think perhaps I have been too harsh in my assessments over the past few years. Sure there have been some ups and downs, but the world seems to be recovering and things seem to be getting better.
We only have to open our eyes and take a look around us to see the things are changing!
Let’s start with the Middle East, or as I like to call it, the “Middle Easy.” Democracy and freedom are flourishing! Across the region the tired masses are throwing off the yoke of oppression and are beginning to form republics based on individual rights and liberty. From the streets of Benghazi to the cafes of Cairo to the beaches of Bahrain, I see more than a few Thomas Jeffersons and George Washingtons amongst the people likely to assume leadership.
The economy is clearly turning around as the wisdom of the economic stimulus has become apparent. We can only hope that as we approach the congressionally imposed debt ceiling that Congress will have the wisdom to raise the debt ceiling so as not to stifle the economic recovery.
QE2 is set to expire soon but I am confident that cooler heads will prevail and a QE3 program will be soon instituted. It is sad to see that some of the leading investment minds that this country has ever produced are so misguided with their calls to end QE. Greed consumes people after a while I suppose. These investors need to realize that our leaders are thinking about how to benefit everyone and that the basic concepts of economics simply do not apply when formulating such complex and mutually beneficial policies.
For companies and entrepreneurs, evaluating risks will still be important, but will take on a far lesser role as we clearly have successfully navigated through the tough times. It is inconceivable that that there would be any more significant disruptions to the financial system and world economy. Indeed, corporate management must be wary of those who provide council about lessons from history and so called “economic imbalances.”
Our popular culture has become a rock of stability that we can all lean on. It is one of our country’s best inventions that we can come home and hear about the trials and tribulations of our celebrities. Each of us can appreciate being able to forget the cares of our own lives to focus on, and learn from, the travails of those with huge fortunes and little responsibility.
As move further into 2011, I am imbued with an overwhelming belief that the worst is behind us and there remains no significant threat to peace and prosperity.
Happy April Fools Day my friends.
Michael Bechara, CPA
Granite Consulting Group Inc.