Monday December 8, 2003
Major Asian and European markets are all down today as are Dow and NASDAQ futures. This comes on the heels of US employment figures that came out last Friday. In order to just stay even with new entrants into the job market, the US needs to add over 150,000 new jobs per month. Instead, only 75,000 new jobs were added in November according to the latest report and for the 40th straight week, there were critical losses in manufacturing jobs. What that means is more jobs at Wal-Marts at the minimum wage and fewer quality slots. Meanwhile, the jobless numbers were said to have declined as in the previous couple of months. Our suspicion is that any decline in the jobless figures has more to do with people giving up and no longer seeking work than any positive reason. Remember that literally incredible gain in productivity that came out earlier in the week? Could it really be more production on the backs of fewer employees?
All this comes despite the greatest binge of debt spending in the nation’s history --outside of World War II, that is-- and the fastest decline of the dollar in recent memory. Now that the tax cuts have worked their magic in consumer spending and 13 interest rate cuts by the Fed have helped impoverish a good portion of retired Americans who depend on a safe and steady return on their safe government backed investments, what we have to show is a bump up in activity that hasn’t been reflected in business spending or, more importantly, hiring.
How, you might ask, does a consumer society deep in personal debt continue to spend, spend, spend, when few good new jobs are being offered. The only excuse for reckless fiscal and current account policy is that it eventually jump-starts the economy. What we have got is a steaming hot stock market full of overvalued stocks and maybe, though, we hope not, an economy that acts like a diesel engine in sub-zero temperatures.
Meanwhile the gold bugs have at least temporarily taken a sigh of relief as the shiny metal pushed its way over $400 and never looked back.
Tomorrow, I want to muse on how important high technology and particular, intellectual property, are to the US economy. But today, one more reality check on consumer activity in this corner of Old Europe.
Here in Italy, today is a holiday. Which one it is, I can’t say but everybody else seems to know. I’m not sure there is a pertinent investment lesson to be drawn from the Rome experiment in cutting off all traffic but it is certainly worth noting. For those of you who haven’t had the pleasure, Rome has been built not in a day but on over two thousand years of ups and downs. The old or “Historic Center” covers a good 15 square miles of mainly winding cobble stone passages, alleys and streets. Every powerful family –usually belonging to a reigning Pope—has its own palace or two with accompanying fountain and square. The more imposing take up large city blocks, causing everybody else to detour around them. Every important cardinal felt impelled to build his own memorial by adding a church or two to the scene so that in this limited area often one finds one large dominating church on a square facing one or two other smaller ones. Having up most blocks, you’ll find a smaller church or ruin; there is no city like this in all the world!
When I first lived here some 30 years ago, it could have been said that the traffic problem was so bad that the addition of one more car threatened to bring the city to complete gridlock. Of course, where there is gridlock there is also massive pollution often abetted by the sweet, soft Mediterranean climate the city enjoys. The Romans are by nature a flexible crew used to muddling through problems, if at all possible. After all these years, they have come to the conclusion that it’s better to “magna, dormi, fa l’amor” or eat, sleep and make love, than to get overly worked over by anything but the most pressing problems. And so, things tend to happen gradually.
So, it seems, has the traffic problem. You can imagine the downtown merchants in the beginning screaming that they would lose all their customers if they couldn’t somehow drive into town. And the single metro line into town was taking centuries to build since every time they moved a foot or two forward they would hit another archeological find and have to stop everything until the scientists had their say. Rome is, after all, built right on top of the ancient city whose walls, at its height, pretty much match the dimensions of today’s more baroque and neoclassical central city.
Yesterday was the second shopping weekend of the holiday season and special in that it was part of a three day holiday weekend when everyone is out getting their gift purchases done. It was a cold, rainy Sunday –in contrast to the mild days we’ve been having for the last couple of weeks—and yet the city was swamped by pedestrians. Not only were the main shopping streets, around the Corso, Fratina, Condotti chic streets swarming but everywhere you went people were out five across and strolling about. You might have thought it was at the absolute height of the tourist season and half the tourists in the world had all descended on the Eternal City, as they like to call it, I suppose for its proximity to the Holy See. But no, these were just shoppers!
This means that if you live in the old city, you might as well forget using your car during weekend days, even though you have a special permit that gives you the right to move in and out. For everybody else, it’s public transportation or a long walk from one of the underground garages placed around the walls. But what has been a long and cautious story is starting to really take off. Clearly, the merchants and restauranteurs --even more numerous than the city’s churches—have nothing to complain about. In fact, every day it seems new stores and restaurants, bars, wine bars, pubs are opened. This is no place for a big box mentality; the businesses have to survive in spaces that were often reserved for storage at the ground floor of the old buildings where artisans once labored or the rats held sway. Needless to say that rents and housing prices here have flown off the charts.
The city is now finally cracking down on the millions of scooters that still have the right to come in at will. For them, there will be inspections and exhaust level testing to cut down on pollution. Walking in the wake of their fumes, you would no doubt say it’s about time.
The lesson to be drawn here is that people like to get out and walk, to see and be seen and, of course, dressers that they are, nobody likes the process more than the Italians. Meanwhile, we couldn’t even get into any of our popular, economic restaurants last night without a reservation. The Old Europe may be poised to come out its recession and without the artificial pumping that has gone on in the States. This may be a good thing for the US because demand in Germany and yes, France, could spark some kind of surge that so far has been lacking. Wouldn’t that be the ultimate iron for George II and his Rummy friends?
Regards,
rmb
dymaxionweb@verizon.net
Copyright 2003 Richard Mendel-Black All Rights Reserved
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