- By Bill Bonner
Markets continued rockin' and rollin' yesterday.
First, Chinese equities soared 5% after the Chinese government pulled out all the stops to send them skyward. They even pulled out a few stops we never heard of before -- including allowing housing equity to be used as margin for stock trading accounts and then securitizing margin debt, as if it were the same as government debt! Debt on top of debt...that ought to get things moving!
Then, in New York, stocks got a big bump up too, with a 241 point boost to the Dow. Bloomberg:
China's stocks posted their biggest gain in a month amid speculation the government will accelerate mergers of state-owned enterprises to bolster economic growth. Investors also speculated China will act to prop up growth following a wider-than-expected drop in exports.
Most S&P 500 members have released results this season, of which 74 percent beat profit estimates and about half topped sales projections. Analysts now project a more modest drop in second-quarter earnings, calling for a 2.1 percent fall instead of a 6.4 percent decline a month earlier.
But the markets may not be leading indicators; they might be the last to know. China, for example, may not be regaining its vim and vigor after all:
Auto sales are flat.
Hong Kong property prices are slipping.
Power consumption is growing at a paltry rate of 1.8% annually - the lowest in 6 years.
Freight traffic is falling faster than it did during the '08-'09 crisis.
Meanwhile, in the US:
There are still a record number of young people living in their parents' basements.
Yields for the worst category of junk bonds have increased 50% in the last 12 months.
Exports are falling. Durable goods orders are also going down. And personal consumption expenses are still on the same downward slope they've been on since 1999.
But technology is our subject today, not the stock market.
We are wondering how come, 20 years into the biggest techno-boom in history, with more than 100 Silicon Valley start-up valued at more than a billion dollars, GDP growth rates are actually half the level of the previous 20 years. What kind of technology is it that slows material progress?
Some technology is clearly helpful. Wielding a primitive club, a man increases the range of his own arm and the power of his swing. But soon his enemies have picked up clubs too. The resulting 'arms race' leads the human race poorer, not richer.
When the US got an atomic bomb, for a few years, it had such a decisive advantage, it was clearly the cock of the walk. But it didn't last. Russia and Israel soon stole its secrets. Britain and France got them on their own. And then, nuclear weapons were both essential...and essentially useless, for you could only use them if you didn't mind being exterminated. They became all expense and no benefit.
Are the laptops, the I-phones, and the internet any different? If you are going to compete in the modern world, you need to use them. But since everyone else uses them, you get no advantage. They too have become essential...but essentially worthless.
And what about the clock? The mechanical clock was invented in the 13th century. We've been slaves to it ever since. The clock did not extend our arm or increase the force of our swing. We could not use it to impose our will on others...or on nature. Instead, it imposed itself on us. We did its biding; it did not do ours. Try as we might, we could not make day night or night day. We could not speed it up, to any useful purpose, nor slow it down. Tick, tock, tick tock, we were forced to march to its rhythm evermore.
And now we are prisoners of every blinking light and whirring sound in our lives. One tells us when to get up. Another tells us when to go to bed. Others buzz when we are in the elevator, at prayer, or in the theatre...interrupting the sacred and the solemn with profane urgency...telling us that we have a communication, of no importance, that must be dealt with immediately!
"Uh...Mr. Bonner..." began a call from a plumber. "You know that situation with the water? Well, I can't fix it. The system is electronic now. You know, it conserves energy somehow. But it shuts off the water automatically if you don't use it...or something. I'm fine on valves and pipes. But I can't do anything with electronics. I know it's a little stupid. But I can't even turn the water on. We'll have to wait to get a technician in tomorrow. Or maybe Wednesday."
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.