If you have based your hope for prosperity on what Globalization Guru Thomas Friedman referred to as The Electronic Herd, this morning you probably feel like one of the pigs that Christ sent over the cliff when he exorcised “Legion.” For today, at least, there is no hiding from the stupid. The Nikkei 225 crashed and burned yesterday and Business Insider describesjust what traders in American Equities markets woke up to this morning.
Markets around the world are deep in the red. England's FTSE is down. 1.7%. France's CAC 40 is down 2.3%. Germany's DAX is down 2.4%. Spain's IBEX is down 1.4%. Italy's FTSE MIB is down 2.5%. In the U.S., the S&P 500 is down 0.8%. This follows sell-offs across Asia. Japan's Nikkei fell by a stunning 7.3%.
I’m sure the parrots at CNBC Squawk Box are remarkably charming this fine and wonderful morning. And Jim Cramer has probably exploded and totally made a mess all over the set at “Mad Money.” However, you can get the same level of news content and far more entertainment by watching this Alien’s clip linked here. What staggers the mind is that all of this is caused by US Federal Reserve Chairman Ben Bernanke dropping hints that he might choose to reduce the rate at which he hands out free money to banking institutions via QE.
This begs a fundamental question that we as conservatives must now pound the table and ask loudly. Why are we asking daddy for free QE money instead of making that cash ourselves? Why must we fear the reaper each and every time the Fed threatens to remove the punchbowl? The answer may well lie in a place far, far away from the grandiose canyons of rich and vital Manhattan. It’s a good day and half’s drive from the posh eateries and bars of K Street.
The coal fields of Kentucky* may well hold the explanation for why we have such a tendency to live and die by what the Fed Chair says about the equities markets and how a panicked electronic herd of yield pigs then reacts. Bill Estep writes of how the industry declines in Kentucky.com.
The number of coal jobs in Kentucky has dropped to the lowest level recorded since the state started keeping count in 1950, according to the Kentucky Energy and Environment Cabinet. An average of 13,109 people worked at coal mines and related facilities in the first quarter of 2013, a drop of 990 people since the end of 2012, the cabinet said in a report completed this month. The pace of the continued slide was slower than in 2012, when more than 4,000 miners in Eastern Kentucky lost their jobs, but that was little consolation.
These coal fields in Kentucky, like the old smokestack industries that no longer produce in America have been a bulwark and defense. They are a national reserve that protects America against the vicissitudes of fate, fortune, The Fed and The Nikkei 225. When we produce solid, valuable, useful things, America does not rely on anyone’s Electronic Herd.
As I wrote when Gold crashed and burned last month; commodity fetishism isn’t going to feed the children. Yet we see no sense of urgency from our current presidential administration to fix this imbalance. The House of Representatives finally rose in disgust to force President Obama to approve The Keystone Pipeline. Republican legislators describe their frustrations below.
“This is the most studied pipeline in the history of mankind,” said Rep. Lee Terry, R-Neb., the bill’s sponsor. “When is enough enough?” added Rep. Jeff Denham, R-Calif. “Five years? Six years? Ten years?”
Meanwhile, away from the imaginary world of The Beltway, real people attempt to solve these problems in Street Level Reality. A recent study found that states that minimize regulatory burdens and create attractive features for business and industry also enjoy greater job creation and safety from the perils of our globalized and frequently dysfunctional economy. Details follow below.
In fact, of the 10 states that had the best economic performance over the past decade, all but two — Nevada and Washington — are solid red states, based on the past four presidential elections. Other top economic performers include Utah, Wyoming, North Dakota, Idaho and Arizona. At the other end of the spectrum, all but two of the worst-performing states are solidly blue. In addition to Michigan, bottom-dwelling states include New Jersey, Illinois, Connecticut and Massachusetts. The only non-blue states in the bottom 10 were Ohio and Missouri. "States with lower taxes and less regulation outperform those that pursue Keynesian-style public policies," said study co-author Jonathan Williams, who is director of ALEC's Center for State Fiscal Reform. "And people are voting with their feet in favor of these states.”
This demonstrates that we cannot expect The Fed, The Federal Government or The biggest and most powerful banks to get together and save us. We will be saved when we save ourselves. All of the prosperity, all the glory and all the pomp these traditional and hallowed institutions enjoy are mined from the sweat of hard-working laborers. The Coal Fields of Kentucky* are to Wall Street what the Valley of Ashes was to East and West Egg in F. Scott Fitzgerald’s The Great Gatsby.
These coal fields aren’t sexy. They produce a product that leads to air pollution and woodland blight. This product also prevents 45% of America from freezing to death in the winter. It also keeps the air conditioning on in Congress when the Senators and Representatives gripe about how awful The Keystone Pipeline would be.
I can’t make even myself totally like coal. I’d personally prefer my electrical power from Unobtainium.** But Unobtainium, like the value underlying all those shares of stocks ramped up by Ben Bernanke’s QE, doesn’t really exist. Coal does, and despite its manifold negative externalities, it does useful and vital things for the health of the nation. We’re better off as a nation when we base our prosperity on that which is tangible and that which serves a useful, quantifiable purpose. I hope the political leadership in The White House and in The US Senate will ponder that thought when the Keystone Pipeline Approval decision flows in each of their directions.
*-And many other places like them all across America.
**-The miracle substance that doesn’t exist.