29 August 2015

29 August 2015

Tetraneuris,

           I do appreciate your letters. We should attempt to correspond a bit more often as we’re not getting any younger. Glad to hear you’ve let the beard come in again. I reckon this has been somewhat of a fall tradition, though it seems a little earlier this year. Sorry to hear about the smoke in Missoula. Perhaps it will take the cooler temps and early mountain snows next month to put out the fires in Montana and neighboring Washington. Missoula fishermen have had a rough summer with the streams having been closed to fishing early in the afternoons given the warmer weather. I know you hate the inversions in February and March, so being socked in today must be a bit depressing. Nature seems to take awkward courses today, more so than when we were younger. Things seem more severe than they used to be, storms causing greater loss and having more material impacts around the world.
           It won’t be long and the colors will be expressing themselves in the surrounding hills. It’s a shame you’re not going to make it back this season for the birds. Candidly, I was hoping this fall we might make it up to the White Mountain area again. It’s been a long time, Tetraneuris. Do you still have the deer rifle you bought decades ago at Kittery? At any rate, the Birch River corridor will be as beautiful as ever next month with the yellow and orange leaves forming their golden patterns as they drift down the small clear channel; bright red and dark purple reflecting in the water as well from the turning canopy above. I realize you miss the hardwoods. Come back and we’ll have a stroll through historic Spring Hill as well. Bring the Fuji and take a few shots of the old place. Like the changing of the seasons, some things remain quietly and tranquilly constant.
           So, I see they’ve sold your two favorite papers. This must be somewhat disconcerting for you as I realize how you embrace change – always with a wary eye, that is. The last time a major financial paper was sold, well… We’ll see how it plays out. Things clearly were already adrift as the old economic libertarian slant was beginning to somewhat wane. Speaking of somewhat wane, do you sense that the US openness to traditional liberal trade is dissipating? Is the US economically turning inward? I’m not talking about on the military front where clearly the US footprint remains erroneously in most places. I’m alluding to trade. Mao of course turned economically inward as well… I simply don’t understand matters today, Tetraneuris. How to retard growth, turn inward. The western press seemed to recently have a field day pouncing upon the declining Chinese stock market. Everywhere one went for information, the internet or traditional paper media, the end of the Chinese growth story was nigh. What has been the performance of the Chinese market over the last twelve months overall? Headlines and general tone dictate matters… Have the Chinese yet allowed back the Great Search Engine and NY financial paper, or are they still taboo on the mainland? Honestly, I’ve not looked into this recently and maybe things have changed?
           How much correlation does the Chinese stock market have today with the country’s overall economic condition? My guess is their market is not as much of a leading indicator as markets are in other parts of the world. Quite simply, their market is immature and very much still in development. This, of course, is the state of the country itself (though the world’s second largest income producer) as it becomes more and more transparent, which, certainly, remains China’s larger issue. Communist states quite simply are politically less open. This will have to change. I remain a believer that as Chinese living standards rise, the country will adopt a more open political state. Markets will drive this, as the country seeks greater financial status in the global economy. Countries, like firms, go through hick-ups, or pauses to breathe, during growth periods. Perhaps, economically, China has reached such a condition. China has not been immune to the real estate situation and has its own debt related issues. Government allocation of resources is not the way to go about things (witness the new US bent). This deceleration in China (and that of other previously more rapid growing economies) is reflected in global commodities prices; this has been the case for a while now. Again, Tetraneuris, it may be the case that a collapsing economic situation in China brings about a hardening of the political apparatus rather than continued liberalizing. Curtailment of western investment in the region (turning inward…) is having an impact. The west should hope the country continues to sort its way through the maze of constructive transformation rather than the opposite (collapse), which the press seems to almost advocate. What are your thoughts, Tetraneuris? It also does not help that as Chinese citizens experience prosperity many desire to abandon the shackles of a Communist regime rather than remain and attempt to drive political change; though, this is also understandable. Who, after all, desires to live in a government controlled state? Some folks might argue that it took a doubling of the US debt load, given the immense military spending of the ‘80s, to hasten along the economic collapse of the Soviets; however, look at our balance sheet now as this mode of thinking carried itself forward through subsequent decades with nonstop military intervention hither and yon (though with different objectives.). Further, look at the subsequent ‘political openness’ of Russia and many of the former Soviet states. Perestroika today has a whole new meaning (if one believes what he reads, which remains subject). Might it simply have been better to allow the Soviet system to economically collapse on its own without an arms race? This seems to me to be a perfectly fair question today. Might the Chinese political system have to change given the country’s economic aspirations? It might indeed.
           The remilitarization of the Japanese understandably has other states in the region concerned. This is proper thinking when viewed through an historical lens. Militarization is being advocated by the US and parts of Europe against the average Japanese citizens’ wishes in order that (1.) western security expenditures in the region may be lessened and (2.) if the region finds itself in conflict, Japan might be able to protect itself and help defend its allies. Given the Japanese economic state, I’m not sure how this can be pulled off, but it appears to be the direction things are headed. To a degree, this shift (what would it be, geopolitical military balance of power…) can be seen beginning to occur in Germany as well. Here, the thinking is playing a greater role in the Middle East (equipment/financially/personnel…). I sympathize with the general German and Japanese consensus, however, which is passive – let’s spend our money in more constructive ways and hope deterrence is not simply something of the past. ‘Let the great nuclear hegemons continue to figure it out without us. We’ve got more important things to do, like manufacture well functioning cameras and automobiles. Trade is what’s important…’ Yet, one also would like to see these two economies carry their weight if these great Middle Eastern and Asian military excursions/security arrangements are going to continue. Are they necessary? Is our country going broke maintaining such interventionist policy arrangements? Should the Japanese have to go to war if the US and China somehow find themselves in conflict? Why is there such an apparent drive towards conflict with China? Tension is everywhere in the region at the moment. Currencies would be a fun subject to touch on, but I’ll wait for the next letter. It seems to me that a country would not desire conflict which generally adheres to harmony, humaneness and sincerity as top ways to conduct one’s self. Any thoughts? Remember, economically the world cannot afford war today. This is basic thinking 101. Look objectively at the state of the global economy. Who’s going to finance another war?
           Ask yourself, Tetraneuris, What is really driving the state of global conflict? Is it more than differing opinions on political economy? What of the role of religion? Is technology helping mankind or a significant detriment to the world today? Has it drawn the world closer together, or pressed matters further apart? Subjects for the next epistle, I reckon. Hope the smoke abates, my friend. I remain,

Your humble and obedient servant,

Periwinkle

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