What a strange year it’s been. The political experience is the most obvious reason—Mr. Trump and Brexit just for starters—but the rapidity of market bouncebacks from nasty selloffs has also been unusual. For most of my career I would tell people it takes longer to put up a building than to tear it down (Mr. Trump might say that’s not true if he’s involved) and it takes longer to get on a horse than to fall off. But this year has made me wonder.
It all comes down to the global savings glut—too much money and not enough places to put it—and too much money wanting to be invested rather than spent. Speaking of politics, our collective lack of political wisdom in failing to recognize how this glut is begging us to rebuild our infrastructure continues to boggle the mind—at least the mind willing to be boggled.
A lot of the problem comes from a false “either/or” view of the world. If you’re responsible, you pay your debts and you don’t run up big deficits. Sounds good. But who are you? Are you the government or the entire nation the government represents? In the aggregate, something is very wrong here. Maybe it’s the level of interest rates. More likely, though, it’s the way we are collectively responding.
What seems most likely is that we’re at some kind of massive inflection point, where technology has wiped out a lot of good jobs but the replacement careers that should be even better (maybe) haven’t arrived yet. At the same time, many of our roads and airports and such are, or should be, national disgraces. Keynesianism is a happy word to some and anathema to others. To this mixed-up, half-writer, half-trader, part-analyst observer, Mr. Keynes had one of the great minds of the past century, and it’s time to put his ideas to work. If this leads to higher rates and more convertible issuance, all the better. Not to be overly political, but Secretary Clinton’s website lists infrastructure spending (under “Jobs and Wages”) prominently on the landing page of her website. Mr. Trump’s landing page just asks for donations.
We will be taking a hiatus from publishing Hybrid Vigor for the rest of August but will return September 6, the Tuesday after Labor Day. Enjoy the rest of August!
(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).