Guest Post: Praising the Financial/Economic Punkosphere
[Frequent commenter James Miller submitted this to me a good two months ago, and I somehow managed to just post it today. But, he should appreciate my punky behavior.–RPM]
by James E. Miller
Last December, the New York Times ran a piece entitled “10 Annual Year in Ideas.” The number one idea on the list, right next to the never ending train, was the advent of “do it yourself” macroeconomics. Citing such websites as The Big Picture and Calculated Risk, the Times described this new past time as a break away from an industry normally dominated by academia:
“Until recently, the economics profession largely controlled the production, dissemination and interpretation of economic data. Now there’s a new trend afoot: do-it-yourself macroeconomics, in which ordinary citizens pull apart the data and come to their own conclusions.”
“At the same time, a growing army of knowledgeable “econo-bloggers” began analyzing the data available online. Strikingly, many of the authors of these blogs…aren’t academic economists but people with real-world experience in financial markets. Their Web sites offer sophisticated interpretations of economic data and hold passionate debates with their readers over the merits of the data.”
What the Times doesn’t acknowledge is the failure of most academic economists to foresee the financial crisis. This failure has provided an incentive to fill a void for those curious to contrarian points of views outside the mainstream. It’s funny how free and open markets work.
So with the economic establishment too inept and brainwashed to drop the Keynesian paradigm, someone needed to step up and offer a new perspective. Particularly a new perspective that doesn’t fall into the trap of believing prosperity comes from the printing press. And most importantly, this new viewpoint needed an attitude that only the fervor of bucking the establishment can bring.
What grew out of this much-needed change is a creature I dub the economic/financial punkosphere.
Case in point: a recent post on the financial blog Zerohedge highlighting a report from the Switzerland bank UBS titled “Euro Break Up – The Consequences.” Under the pseudonym of Tyler Durden, the author highlights the main points of the report:
“the Euro does not work. Either the current structure will have to change, or the current membership will have to change.”
“the consequences would include corporate default, recapitalization of the banking system and collapse of international trade.”
“It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.”
In brilliant prose, Durden sums up the report:
“So you see: save the euro for the children, so we can avoid all out war (and UBS can continue to exist).”
Yet this isn’t the best part of the post. When it comes to Zerohedge, one of the best aspects of the site is the comments section which is uncensored. People posting under such names as “Sudden Debt” or “Dabernank,” complete with avatar pictures ranging from naked women to cartoon animation, shoot off enough snarky comments that any reader could spend the rest of the day enjoying each one. As for the mentioned article, this post from user “TruthInSunshine” (complete with an End the Fed avatar) in particular had me rolling:
“Who will play the roles of the European versions of Hank ‘Tank in the Streets’ Paulson, Ben ‘No Banker Haircuts’ Bernanke & Timmmay ‘I Want To Be A Player – Can I? Huh?
Please’ Geithner?”
This is precisely what encapsulates the financial/economic punkosphere. It is composed of a minority of like-minded individuals spontaneously coming together who reject conventional wisdom and aren’t beholden to academic tenure. In a global economic system defined by the collusion of government and large financial institutions, these bloggers and commentors try to make sense of the world while calling out idiocy whenever they deem fit. Keep in mind; the label “punk” is used as a term of endearment for its rebellious connotation and not an insult.
Many times, the criticisms they throw out are what make them incredibly popular. Take Mike “Mish” Shedlock, a self described deflationist, for example. Not only does Mish dish out plenty of insults at the incompetent and lying central bank establishment, he consistently does it in an informative and entertaining manner. From a recent post on Mish’s Global Economic Trend Analysis, he responds to a pathetic warning from Head and soon-to-be-Head of European Central Bank Jean-Claude Trichet and Mario Draghi and issues his own cautionary note to the central bankers:
Hello Mr. Trichet.
The odds 17 sovereign states “get their act together” quickly regarding a fiscal union is zero.
There is no agreement on Eurobonds even from Germany and France, so how are 17 countries supposed to quickly agree on that?
Finland and Austria want collateral, and pray tell why shouldn’t they? Is every country supposed to do exactly what you want?
Greece is going to default and you and your big ego made matters worse by refusing to accept that fact, so much so that you and the ECB failed to plan for it.
You want 17 countries to get their act together. How about one central bank, the ECB, led by you, get its act together and admit your policies have failed? How about the ECB coming up with a legitimate plan for dealing with it this crisis instead of illegally making demands on sovereign nations?
The market gave you fair warning on Greece and you refused to see it. Now the market has said “time’s up”.
Face the facts Mr. Trichet “The Euro has failed.”
Now of course Mish is right, but it’s doubtful Trichet or Draghi will read the warning or even take it seriously. It’s way too logical for either of them to take the time. But that’s beside the point; Mish’s blog provides an outlet to criticize the establishment as well as inform people on global economic trends all while maintaining a humorous composure. When it comes to the topsy-turvy world of fiat currency, it takes a great deal of humor to reconcile what will inevitably be a collapse of an unstable fractional reserve banking system.
In this spirit, I praise what has become the financial/economic punkosphere that consistently challenges the establishment. The internet has done wonders in the decentralization of information and knowledge. No longer do ivory tower academics hold all the sway when it comes to economics. Thanks to this new outlet of blogs, the Federal Reserve has never faced such scrutiny by the public in its almost century-long existence.
But don’t expect the establishment to take this new movement lying down. After all, the armchair positions within the higher arches of academia can be put at serious risk if the theories espoused on national television and taught to thousands of youngsters happen to be wrong. Recently Zerohedge had a kind of “war of words” with economist Nouriel Roubini who is, as John Tamny puts it, “still clinging to his 15 minutes after an economy call that he got right for all the wrong reasons.” Roubini still grasps to the Keynesian mindset which has ravished the economy and has made the act of saving a virtual sin with super low interest rates and a frightening concentration on the sacred benefits of consumption.
There is something to be said about an economic theory that punishes the savers who are the most unfit for labor, but I will leave that to the punks in the blogosphere who know best.
Other notable mentions of the financial/economic punkosphere include:
Robert P. Murphy- Murphy’s Free Advice blog is used to both engage and critique fellow economic commentators in an always jovial manner. Paul Krugman has yet to take him up on his debate challenge, thus proving he would rather let the downtrodden citizens of New York starve.
Robert Wenzel- Economic Policy Journal serves as an outlet to not just mock the financial/economic elites that be, but to offer data and policy analysis that is second to none.
James Altucher- I will let such posts as “Politics is a Scam- Why I Will Never Vote Again” and “Abolish the Presidency- It’s a Useless Job” from The Altucher Confidential speak for themselves.
And of course LewRockwell.com, the Ludwig von Mises Institute, and other blogs such as CafeHayek which provide plenty of ammunition for every anti-statist out there who tires of the mindless garbage that passes for the mainstream political thought.
Thanks for posting Bob, really appreciate it! It may be a bit dated in terms of what is reported but I think most readers here will understand the context.