One thing your editor notices after being out of contact with the financial news for the better part of two days is that most financial news is rubbish. It doesn't matter much, at least when it comes to be the big underlying themes moving markets that we like to discuss here at the Daily Reckoning.
For example, once we were able to log on to the World Wide Web at our hotel on Maryland's Chesapeake Bay, we learned from Bloomberg that Warren Buffett has ruled out a double dip recession in America. Gadzooks! Somehow, while we were sleeping over the Pacific, America became a command economy subject to the whims of Warren!
Buffett, in his role as aloof spokesman for a bygone era, said, "I am a huge bull on this country...We will not have a double dip recession at all. I see our businesses coming back almost across the board."
All of that is interesting. But only some of it is relevant. Berkshire Hathaway's shareholders would be more concerned with the actual performance of its units than how Buffett feels about America. But to the extent that Buffett himself has become a brand (cliché), then exuding confidence about future profits is probably part of his job.
Buffett being bullish on America the brand may be an example of generational attitudes. We had this conversation on Saturday night with a financial journalist from one of Australia's tabloids. There is a certain generation of Americans and Australians who have a basic confidence in the power of good government to accomplish big and worthwhile goals. After all, this is their experience of government, from World War Two on.
And to be fair, we've had contact with this as well. For example, last night at the airport hotel in Baltimore we ran into a group of World War Two veterans. Their trip to the DC area had been sponsored by an outfit who wanted to honour war vets by giving them an all-expenses paid trip to Washington to see the war memorials.
The irony for your editor is that the group at the hotel last night was from Northern Colorado, where we were born and raised. We sat next to a gentleman from Loveland, Colorado and made small talk while we watched a football game.
"I can't believe they made such a fuss over us," he said. "They picked is up in a bus. But we had a police escort all the way to airport. And along the way the firemen and police from the local houses came out and saluted us. And we didn't even have to go through airport security, which is a good thing, given all the walkers and medical equipment these guys have now. It was a chartered flight too."
"It looks like quite a few of you are staying out late," we ventured.
"Bunch of drunks probably," he said, "Present company excluded."
We chatted for a bit longer and gradually realized that the America this man went to fight for as a young man was a much different country than the America he was travelling through now. For example here in the Baltimore you see conflicting signs about America's fortunes. On the one hand, real estate prices in the region have fallen less than in other places. Government is a growth business. There is always a migration of transient opportunists and conmen making their way to Washington and living in its suburbs.
On the other hand Baltimore itself - once the great Eastern port where the ocean met the railways - is a shell of its former itself in a quite literal sense. Baltimore's outer suburbs used to be working class houses for the families of men who made commerce work in the city. The raw materials and finished goods of the interior of the country were unloaded from trains and on to ships and sent abroad.
The sheer productivity of 19th century American generated huge profits and surplus capital. That capita funded more business and built better infrastructure to facilitate more trade. It also built some beautiful 19th century mansions in Baltimore's Mt. Vernon neighbourhood, some of which are now home to your editor's parent company.
Even as you travel down the Chesapeake Bay to some of the earliest European settlements on the Eastern Seaboard, you the tobacco farms that grew some of America's most profitable exports to Europe. And that time, and for a long time thereafter, it was mostly raw materials. Later, it was finished goods and cars and higher value-added goods with bigger profit margins for producers.
It would be unfair to say America doesn't make anything. But you get the feeling that its biggest export for the last twenty years has either been the idea of America itself (the brand) or the dollar. Not that it hasn't been a good trade. Trading dollars for goods and services gets you an awful lot of goods and services.
But what if the rest of the world isn't interested in making that trade anymore?
Apologies in advance if we're a bit scattershot this week. It's the one time a year we get to catch up with our colleagues from around the world to hear how business is going. It will also be interesting to see what people who live here every day are saying about the economy and the future. And at the very least, it will fun to watch Kris Sayce eat as many cheeseburgers as possible during his short stay in the spiritual home of the cheeseburger. Until tomorrow.
for The Daily Reckoning Australia
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- Where Warren Buffett is Wrong
- Bashing Warren Buffett…Once Again With Feeling
About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.