I never saw a city boy yet that was worth a damn.
— Ernest Hemingway1
Note: Once in the Fifties, seeking solace from my toil in the topless towers at Wall and Broad Streets, I bought a pair of socks for nine cents in a shop just abaft the famous Fish Market, close to the Brooklyn Bridge. When I donned them for the first time, they disintegrated, with the exception of the label, which read “Made from unidentified fibers.” That strange metaphor has ever since colored my opinion of both markets, the one on Fulton Street and that of neighboring Wall Street, with the suspicion that both are somewhat fishy.
Although I’m neither a fisherperson nor a politician, I’ve suggested in the past that D.C. and Wall Street are birds of a feather or, more appropriately, the same kettle of fish. I’ve drawn the tired analogy between an oriental fish maket and the machinations that go on in our nation’s capital, but I’ve never until now extended it to include Wall Street.
In your typical oriental market, the conversation, the haggling, negotiation and perhaps ancestral name-calling goes on between the protagonists verbally and at eye-level, while far below at groin level the real transaction, the exchange with twitching fingers, is taking place, quite divorced from the face-saving dialogue above.
This piscatorial drama has played out ad nauseam over the past year, through election dialogue, debt-ceiling wrangling and fiscal cliffhanging. It has fully exemplified the bi-level business-as-usual in Washington. Fixating on the trees at eyeball level, we the viewing public ignore the forest, the real groin-level event. The debt-ceiling opera that plays out every six months or so routinely threatens that we teeter on the brink of financial chaos, unless Congressmen with their sticky fingers pay the bills they have already incurred. We’re induced to ignore the fact that money already spent has no ceiling, just as the perennial virgin insists she’ll never do it again, but whose eyes always flutter closed, as Auden put it, at the last moment.
Did anyone seriously believe that the masters of the universe in the topless towers of Wall Street, 99.49% Republican, would allow a jumped-up politician from Ohio to jeopardize what they had almost lost before the Big Bail-out? Did anyone seriously believe that Obama would face the 20012 election branded as the President who presided over Great Depression II?
Hell, no. Which brings up the current text, which expands beyond the fishy narrative in the nation’s capital to include the financial center.
The Washington gridlock, which every talk-show johnnie is currently wailing about, is in reality not come-by-chance, but is an intentional verbal back chat that obscures an unspoken agreement to disagree, because that suits everybody’s purpose to a “T”.
Tariq Ramadan, a professor of Islamic Studies at Oxford University, said recently that the perennial Middle Eastern malaise – a semi-permanent state of uncertainty and unrest — currently centered in the Syria-Iran-Israel squabble or contretemps — suits both the Russian-Chinese faction and the Western Good-guy axis just fine. Why? Because a settled, peaceful Middle East would preclude all outside intervention, not to mention any excuse for the pursuit of the economic and political agendas of which Russia and America are the opposing coaches.
In a similar fashion, the Washington fishers of men thrive on stalemate. The Republicans can stir the pot and hamstring the Administration, while trying to solve their internecine dissolution and burnish Rand Paul and Jeb Bush for 2016. Meanwhile, the Democrats can blame the dysfunctional Congress on Boehner and the tea-baggers alike, bad-mouthing the obstructionists, while dressing the mid-term election market. Who needs the deflation of agreement?
But that’s just the upper-level scenario, the haranguing at eye-level that stimulates headlines and filibuster. It’s the play on Wall Street that involves the nitty-gritty, the sticky fingers, the “get ‘er done.” And it is so countervailing to the uncertainty in Washington.
In addition, the lowdown, the true grope, in Washington supports the mocket. One such atypical move (for Pennsylvania Avenue) might be called the Fed Fandango, which follows this reasoning: if Ben Bernanke is spurred to get off his haunches with some legerdemain such as term-lengthening, further Fed buying programs or simply saying nice inflationary things to Congressional inquiries, he can make the stock market roll, not to mention the heads of all the short sellers, contrary to Obama’s apparent failure to dance with the Republicans.
The Fed Model, it’s widely recognized, is that the near-zero interest rates on ten-year Treasuries make just about any stock — from high tech to moose pasture — look good by comparison. Witness the recent Dow all-time breakout over 14,000. But that alone is no reason to conclude that you should favor the stock market over your mattress. Hey, if there are two ugly sisters, one of whom can’t dance, even if the other one is capable of dancing with the stars, they’re both still ugly. So more stimulus (an overworked noun) is necessary.
But the winter of our discontent (sayeth the right-wing Wall Streeters) has by this son of Chicago’s south side made glorious summer in the market — which projects nine months’ gestation in advance, you’ll recall. So Merry Christmas to all in 2013. And don’t forget, the 2014 car models are due any time now.
Hitherto, there was gloom and misery everywhere. The Chinese economy was only growing at the rate of 10%, for starters. For 1.3 billion people, that’s chopped liver, considering they started at near zero before Mao rescued them from a fate worse than capitalism. But we shouldn’t lose heart over the stagnant fortunes of rice and General Tso’s sweet and sour. Because, to quote Alan Abelson, the constant weather vane at Barron’s mag, it’s just possible that the American economy will improve regardless of our Chinese connection. Like it’s also just possible that the Chicago Cubs might win the pennant.
All in all, the bulls are back on Wall Street, with all the bull thereto appertaining. Gene Epstein, writing in the aforesaid Barron’s, cautions “Even with the Dow reaching a nominal record of 14,329 the performance of the market over the past five years is still below par. That bodes well for the bulls.”
Some guys are never satisfied. Even the housing market is back to quasi-respectable, with new home sales up 15.6% in the most recent month, with private residential projects up 82%, annualized in the final quarter of last year.
But here’s a caveat, or at least caution: world central banks (not necessarily including the Fed) have recently been buying gold like it’s going out of style, which of course it isn’t, at a rate not seen since 1965, which is usually taken as ancestral voices prophesying exit strategies for stock players.
But it’s widely acknowledged that Bernanke, or rather the faith in Bernanke, can move mountains, and as a matter of fact, a recent profile of the Dow since 2009 in cross section does bear a startling resemblance to an outline of the Sierra Madre. The Fed Chairman can do something mountain-moving if he (read the Administration) wants to; he can announce a maturity extension in Treasuries, or engage in quantitative easing by buying up Treasuries, kind of like expanding the money supply, which Republicans call printing money, and they should know. And Bernanke can drop the hint that there’s other things the Fed can do to goose the economy if it needs to. I dunno. He’s done about everything short of asking the Obama kids to set up a lemonade stand outside 1600 Pennsylvania.
But getting back to markets, which is where we started, while some believe that markets have a life of their own, they’re all after all man-made, and therefore built in mankind’s likeness. For example, the Fulton Street Fish Market was eventually rescued and liberated from mob-rule and Mafia control by a crusading Rudy Guiliani, and moved from lower Manhattan to a new location at Hunter’s Point near the Bronx River. Which proves both that Rudy was a great mayor and, malheureusement, an inarticulate Presidential candidate.
Just as markets, at least the fish variety, in the orient as well as within our system, portray both a public image and — far below — the reality of men and fisher’s of men and markets. Which of those two varieties the Dow Jones is really engaging in, we’ll find out sooner or later. Let’s hope it’s not made from unidentified fibers.
If so, there’s one other alternative.
Bye-bye. Buy gold.