Sunday, October 14, 2012

When a Dollar Was Worth a Dollar

 As we near the U.S. Presidential and Congressional elections, a tired refrain echoes from the incessant media outlets and increasingly choreographed "Town Halls" which bear no resemblance to any town or any hall I've ever seen.  "Are you better off now than you were 4 years ago?"  This question is supposed to evoke one of two reflexes.  The first, if you're of the Obama persuasion, is to allege that the President has staunched the bleed of banking and economic collapse that was hemorrhaging around the world at the ignominious end to the Bush-Cheney reign.  If you're of the Romney persuasion, you point to trillions of dollars of debt and economic stagnation in industrial production and growing unemployment and you want your man to do his alchemy.  Spoiler alert.  The question is rhetorical.  "Better" is exclusively in the eye of the beholder and is contaminated by the nasty human deficiency in the capacity for long-term memory.  Few of us remember what we ate for dinner three nights ago.  We might remember a few names and faces from the party we attended a month ago.  We may recall bits and pieces of last year's birthday celebration.  But doing a full consciousness scan four years back?  Remote, at best for the most awakened among us.  Reliable for even fewer.  And a great basis for determining leadership - absolutely worthless.

It's been impossible to escape this week's market foreboding if you're tracking the economic press.  China's exports unexpectedly rose.  Apple's report card one year post Steve Jobs has analysts wondering if the world's largest company by market capitalization (a company whose post iPhone 5 launch nearly $60 billion market cap LOSS would put the LOSS at number #90 on the world's largest corporations) is going to continuing rising like a Red Bull balloon over Roswell, NM or whether it's going to return to Earth like so many aspirants have done in the past.  If you're long Exxon (still clinging to its second place $420 billion), you're probably in safer company as our oil addiction seems to be well in hand.  If you're Saudi Arabia (at $597 billion GDP and at number 20 in the world's largest sovereign economies) beware.  Apple knocked off Sweden without a second thought and they've got promoters who are looking to pump more hot air into the stock than all the oil you've got under the sands.

Though routinely distracted by Felix Baumgartner's record setting sky-diving attempt funded by Red Bull - a drink that I simply cannot understand, but, whatever - I thought it might be informative to decaffeinate the hype surrounding the four-years-better question and see if we could get some sense of where we actually are.  

The last time the U.S. dollar was worth, well, a dollar was in the April of 2003.  Now what I'm referring to is the Dollar Index which measures the dollar against the Euro, the Yen, the Pound, the Canadian Dollar, the Swiss Franc, and the Swedish Krona.  With all of the currency manipulation that we've had lately, the dollar is currently worth just under $0.80.  And, for those of you who are NOT paying attention, the fraternity to which we're comparing our health is not filled with economic Olympians.  In fact, there's a bit more life support than wholesome living in our comparables.  So when we find out that we're relatively less healthy, we must remind ourselves that we're comparing ourselves to a club that includes zombies and organ donors.

When we hear about market capitalizations soaring, it's somewhat advisable to recall that we're not comparing Apples to apples (pun fully intended).  But there's an even more fascinating piece of data that I focused on this week.  The "YOU" in the question.  Remember that the question is not some abstraction about whether the world's better off:  you know; more drone strike assassinations; more lives lost in the wars on drugs, terror, and transparency; more permanently unemployed; more displaced due to environmental and social dislocations; more connected to the internet; more smart phones; more Monopoly money; more engaged in cross-border collaboration.  The question is about YOU. 

And that's where the numbers are fascinating.  Now mind you, I'm not suggesting that any of these metrics are either positive or negative - they're just numbers.  But they may inform some of our perspectives.  Four years ago, nearly 250 million equity trades were executed each day on the Dow Jones Industrials.  Friday, there were about 117 million.  The S&P was traded in over 1.7 billion daily trades years ago - now 453 million.  High-frequency and quantitative model driven trades outnumber direct, conscious discernment mediated trades on many stocks.  In short, machines are trading less often at higher frequency and notional values with increasingly less valuable money.  Sooo… if you're a machine, you're better off.  You're working less, deciding with less conviction, and pretending to be smarter.  If you're a human… well… ummm????

So here's a question.  Is it Romney or Obama, is it Labor, Greens, Christian Democrats, Socialists, Communists - who is better suited to preside over the Digitocracy we've created in our holographic image?  Tragically, there's probably little difference.  In fact, while we slept as Exxon's oil, Apple's gadgets, and Wal-Mart's hideous smiley face cheapness surpassed the majority of nation state relevance we ceded our values to those we neither elect nor impeach.  

Which leads me to THE question.  What is relevant now?  Dollars aren't.  Governments and Nations aren't.  What is relevant on this day that a man broke the speed of sound in free fall and landed where aliens are prone to visit is whether it's time for us to jump from the tethers that have bound us and relent to the boundry-less space in which we're known by our contribution to humanity rather than by our self-imposed limitations.  We are better off when we realize that it's always been in the interactions between people that civilization is enhanced - not in the transactions through which we're constrained.  Go ahead, Jump!  

BTW... thanks for all the comments and thank you to the commentators... keep it rolling!

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Thank you for your comment. I look forward to considering this in the expanding dialogue. Dave