A Disconnected World – The Information Age Irony
As economic beings we are extremely ‘short-sighted’ by nature. We don’t fully appreciate the differences and interactions between the short-, medium- and long-term.
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It was Burns & Mitchell (1946) who tried to measure the economic cycles. Today there are four broad classifications of business cycles as follows:
- Kitchin cycle (3 – 5 years) – The rate at which businesses build up their inventories
- Juglar cycle (7 – 11 years) – Related to Investment flows into Capital such as factories and other capital means of production
- Kuznets cycle (15 – 25 years) – Period between booms in corporate or governmental spending on large scale Infrastructure projects, such as rail, roads, etc.
- Kondratiev wave / cycle (45 – 60 years) – The ‘super-cycle’ referring to the phases of capitalism. Crises such as the Great Depression and the current Financial & Sovereign Debt driven contraction.
But the Information Age has undermined these cycles? Or only undermined our understanding of these cycles? That is the key distinction we need to draw.
Are there any longer-term term cycles, which are beginning to contract with advances in Technology.
The Dark Ages (lets say from the collapse of the Roman Empire) until the enlightenment lasted around 1,000 years. The Enlightenment (approximately 1650s) through to the First Industrial Revolution (from mid 1700’s to mid 1800s) lasted around 200 years. The Second Industrial Revolution (driven by electricity from around mid 1800s) lasted another 100 years.
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The Third Industrial Revolution, or rather the Digital Revolution is the COMPUTER or DIGITAL AGE.
However, interesting this brief synopsis of economic history is, the actual relevant issue is recognising the length of the TRANSITION period between these ‘Leapfrog’ Technological advances.
We are not very good (yet) at recognising, never mind managing these tectonic shifts in the economic landscape.
Is this were we found ourselves today?
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theMarketSoul ©2012
Related articles
- End of the Industrial Revolution (larajla.com)
- We’re still going through the Industrial Revolution…Backwards! (asystemofrandomtangents.wordpress.com)
- Econ 210a: Spring 2012: U.C. Berkeley: The Industrial Revolution: February 15, 2012 (delong.typepad.com)
- Robert Allen: The British Industrial Revolution in Global Perspective (delong.typepad.com)
- The jobless digital revolution (japantimes.co.jp)
The BIG Sovereign Debt Structure cliff – Part 1
In yesterday’s article, “Where will all the new money come from?” we concluded the brief analysis with the Sovereign Debt Maturity profiles (otherwise known as the Debt Structure) of both the USA and Italy, noting how similar the two profiles looked at first glance.
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Digging a bit deeper today, we would like to compare those charts to cliff edges. We trust that the sentiment of the article is that we perceive Central Banks across the globe fretting about the ‘New Money’ we were referring to. With general economic confidence waning and the outlook for a sustainable long-term solution to sovereign over (indulgence) spending fading, the landscape is looking very bleak at moment.
New money will have to be printed (Quantitative Easing or QE) if investors in the capital markets cannot be found to bear the burden of purchasing new Bond and Treasury issues.
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Some headlines over the few weeks alluded to Bond auctions in Portugal, Italy and Spain being well supported (see related article at the bottom of this post), but these were not major refunding and roll-over exercises. Greece is continuing to be a welcome distraction for politicians and Central Bankers in both taking investor’s eye off the bigger problems coming along the line in Q2 2012 and in winning time to hopefully come up with a credible longer-term plan to reduce debt levels and then return to growth.
Auction Calendars
Let’s take a look at some of the crucial Sovereign Debt auctions coming up in the next few months:
The link below provides a time table schedule issued by the US Treasury for T-Bills, T-Notes, T-Bonds and TIPS, for at least the next six months.
To get the equivalent Eurozone calendar is not so easy. (Partly because each individual country issues Bonds, as there is no Central Eurozone issuer of Bonds, but at least a central purchaser, namely the ECB – European Central Bank)
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We are currently investigating sources of information for Eurozone Sovereign Debt Bond auctions and will return to this theme in very near future.
theMarketSoul ©2012
Related articles
- Italian Debt Auction Sends Yields Tumbling: What Investors Need to Know (fool.com)
- Investors eye European bond auctions (bbc.co.uk)
- Successful debt auctions give boost to Spain and Italy (independent.co.uk)
- Italy borrowing rates drop again in bond auction (newsok.com)
- Italy sells more bonds as Greece struggles with debt (ctv.ca)
- Italian Debt Auction Sends Yields Tumbling: What Investors Need to Know (dailyfinance.com)
- Stock Market To Cast Confidence Vote On Eurozone Monday After Disastrous German Debt Auction (jhaines6.wordpress.com)
- Italy’s borrowing costs tumble after debt auction (guardian.co.uk)
- S&P cuts French rating to AA, hurting eurozone confidence (ctv.ca)
- Eurozone faces tough hurdles early in 2012 (sfgate.com)
- EU Faces Debt Hurdles Early in 2012 (abcnews.go.com)
- The road ahead for the struggling eurozone economy (oregonlive.com)
- Eurozone faces tough hurdles early in 2012 (seattletimes.nwsource.com)
- The eurozone’s borrowing costs may stay lethally high (bbc.co.uk)
- Buba’s Jens Weidmann Voted Against ECB’s Decision To Undermine The Sovereign Bond Market (zerohedge.com)
- Eurozone will pivot on Italy in 2012 (cbc.ca)
- Eurozone faces tough hurdles early in 2012 (ctv.ca)
- Stock Market Plunges On German Debt Concerns (huffingtonpost.com)
